I know that the semiconductor-related stocks are on fire these days, so I was hoping someone could lay out the different semiconductor Gorillas and Kings, etc... so that I could see where PMCS stands on this totem pole.I forget if it was an analyst from RobertsonStephens, or if I just heard it on a GG board, but I remember reading that PMCS is making good profits right now, but that their profits were from products made about 5 years ago or more. The same analyst said that therefore PMCS will continue to soar, as their new products will soon be making a profitability impact as well.I am slowly getting all this research stuff, but slow is the operative word. So if anyone has the time or inclination to do any kind of a run-down on PMCS and its future and/or GG status, it would be greatly appreciated.Callante
PMC Sierra is a great company and I'm not ashamed to say that I own it, and have owned it since it was hovering around $30/share (hard to believe that was just last summer) and added to my position on the dip last week. They have to best gross margins of any semiconductor I've ever seen at 80% (if you find a better one let me know and I'll plow my money into it). PMC provides a key component of modern high speed telecommunications chips that format streams of data entering a network. You are correct in that PMC is making the majority of their profits off technology they developed five years ago (not to imply that they've been sitting around doing nothing over that time). An advantage PMC shares with the likes of Broadcom is that it works closely with Cisco Systems, which means that it gets an early look at the cutting edge networking-equipment design, giving it a big jump on most of its competitors. Unfortunately it's technology is not a standard and thus it is a strong king rather than a gorilla. One other concern I have about the company is that a large portion of PMCS's sales come from producing chips related to ATM. Many people are worried that ATM will eventually be phased out by new gigabit ethernet, since its much cheaper and has recently virtually caught up to ATM in terms of quality of service.Hold your PMCS close to your heart, but watch the industry carefully for any move in technology preferences.Matt
Y2Krash,Thanks for the reply, but I am wondering also, per your comment of them not sitting around: Has PMCS addressed this ATM future concern? Either by developing some strategy with the gigabit ethernet, or by creating a new niche.Also, since you agree that its current profits are based on older technology, what is the new stuff they have been working on that is not ATM related?Finally, have other competitors better prepared themselves for the coming gigabit ethernet?Finally-Part Two: What the hell is the gigabit ethernet?Thanks for the helpful replies,Callante
...What the hell is the gigabit ethernet?Thats what it is. Ethernet at gbit rates. ATM is a better protocol for video and audio, and there are built in features for giving better service to specific traffic, but the installed base of non-ATM devices is so large that the justification may not be there to convert to the better technology. It'd be more expensive, and with improvements to existing devices we may not be able to tell the difference.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |