QuickLogic's "New World" for Content-on-Demand

11/12/2020 5:00 am EST

Focus: TECHNOLOGY

Michael Murphy

Editor, New World Investor

QuickLogic (QUIK) — which makes semiconductor devices — is recommended as a play on the mega-shift towards content-on-demand, explains Michael Murphy, editor of New World Investor.

The company reported another poor revenue quarter, although they did beat the consensus earnings estimate. Revenues of $1.78 million were short of the $2.0 million estimate, which itself had been sharply reduced from earlier this year due to COVID-related product introduction delays.

The pro forma loss was 15¢, not as bad as the -19¢ estimate. New product revenue fell 22% from the June quarter to only $0.7 million, down 37% from last year.

On the company's latest conference call, management attributed the low sales of new products to “continued headwinds associated with the broad impact from the COVID-19 pandemic.” But they said “We currently see Q3 as the revenue low point and expect sequential improvement with a better trajectory into 2021."

They also forecast December quarter revenues of $2.7 million, plus or minus 15%, which is below the $3.4 million consensus estimate. The pro forma loss per share should be 11¢ to 12¢, about on the 11¢ loss estimate.

I’ve stuck with QUIK because they’ve done so many things right, like acquiring SensiML and integrating it with a wide range of related products, including Google’s TensorFlow Lite for micro-controllers and STMicroelectronics, and joining the ARM AI Partner Program just before Nvidia announced the acquisition of ARM.

CEO Brian Faith said: “We have been evolving our focus from being primarily a product company serving only large customers in the consumer markets to a platform company serving a much broader set of markets and more diverse set of customers. These include consumer, IoT, industrial and the military space. I remain confident we will see this change deliver improved financial results in fiscal 2021.”

As a long-term holder of these shares, I feel like QUIK is a football, the CEO is Lucy, I’m Charlie Brown, and next year has to be great with all they have going on. Meanwhile, Wall Street only took the stock down a nickel after the latest report, suggesting the shares are sold out.

With a measly $32 million market capitalization that includes $24.7 million in cash (although also $30 million in debt), QUIK is a "Buy" up to $10 as their sensor hub is widely adopted in smartphones, tablets and wearables.

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