SIMG - Follow OVTI's footstep?

SIMG - a semiconductor company has 3 lines of products - Consumer Electronic, Storage (one new product below - SteelVine System) and Display/PC (see right diagram - SiI 1364 transmitter). Its chip delivers the digital contents in a secure, and high speed way to the device (TV, LCD, etc). SIMG is also one of the founders to a group that promotes HDMI standard. SIMG has a number of IPs in HDMI and Serial ATA (storage).



So far it is a to-be-turnaround story. The company has negative net income since 2002, and 2005 is the first year with profit. Observing stable expenses, and steady increased income over the years. Hard pressed with the management, considering that the company acquired 2 companies, restructured the products (de-emphasize/abandon a few), and engage in the workforce reduction, etc, all in the last 3 years, One has to recognize its management efficiency.

If SIMG may keep the expense level, have moderate income growth, its 2006 outlook will be very bright. This stock, in many aspects, resembles OVTI in later 2002 and early 2003.

Its success, without questions, will be highly dependent on its management execution, technology trends, as well as its financial management. (have some concerns as they continued to issue stocks over the years, and option grant - this need to be further followed). Most of their sales are through distributor - reduce the profit margin and less communication with end customers.

On the downside, support is strong at 9.50, which is ~10% off the current price.