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Earnings Season Randoms: Vicor, Cypress Semi, Plantronics, Sirf, Mueller Water


Earnings season truly is like a "box of chocolates."

  • Vicor (VICR) gave me fits yesterday, after reporting a surprisingly bad quarter and saying that customers pulled the plug on demand. Not a shocker when it comes to PC related products, but a "canary in the coal mine" when it comes to customers in the capital equipment side of things. Was the CEO blowing smoke about the deteriorating macro environment, just to cover his tracks? Maybe, but I always viewed the guy as a straight shooter. What am I doing with this? I was long 80% of a position from $17.00 and I bought the rest yesterday at $11.00. It was either average down or cut bait, and in the scheme of my other positions, and perhaps falling back on some bad old habits, I chose the former. As you can tell from the tone of my writing, my level of conviction is not exactly high.

  • Cypress Semi (CY): T.J. Rodgers continues to deliver on the profit promise. No warnings signs from him (and if they were there you can rest assured he'd tell you), but this exchange was "interesting":

    Analyst :. . . it looks to me like the revenue guidance might be conservative, especially given the growth coming from SunPower. Can you comment on that and why you're looking for less turns in the September quarter?

    TJ Rodgers: "We have 87% of the quarter booked from day one, our turns are consistent with the quarter, but this has been going, good news, for six quarters now. And like all of you, the questions today are clearly, how long will this last and how long will it be good type questions? We also wondered, we see no signs whatsoever, and therefore, we're giving you a number we believe we can make." (Emphasis added)

    Are folks starting to wonder if the party can last? Are they seeing something that suggests that it should not be lasting? VICR and CY have different products, but probably share many clients. Am I paranoid?

  • Plantronics (PLT): And the answer to whether PLT's business could really be as bad as the chart, is a resounding yes. Incidentally, it too cites a marked macro-economic slowdown. At least the CEO had the decency to refuse leveraging up the balance sheet just to buy back (prop up) the stock. Rare common sense these days. I was able to unload my stock for a $0.50 loss after hours. My calls won't be so lucky.

  • Sirf Technology (SIRF): The stock is satisfying my wishes this morning by getting taken apart. I've not gone over the call yet, but my sense is that this is one that I gotta buy when people are yelling fire, even though the next few quarters might look gloomy. Keep a close eye on Garmin (GRMN) as that one has no room for misses.

  • For the waterholics among us, add Mueller Water Products (MWA) to the watchlist. The non-water infrastructure part of the business could be a big ball-and-chain for it, hence only an appearance on the watch list for now.

  • This type of group hug followed by a 2x4 across the chompers of the participants truly inspires confidence in management, doesn't it?
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Position in VICR, CY, PLT
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