Notes
Integrated Silicon Solution, Inc., (ISSI) a fabless semiconductor company, designs and markets integrated circuits for digital consumer electronics, networking, mobile communications, and automotive electronics markets. The company?s products include high speed and low power SRAM; and low and medium density DRAM. Its SRAM products are used in WLANs, cell phones, base stations, networking switches and routers, fiber to the home (FTTH), DSL modems, LCD TVs, set-top boxes, GPS systems, instrumentation, engine control systems, medical equipment, telematics, audio and video equipment, satellite radio, POS terminals, fax machines, copiers, tape drives, and other applications. The company's low and medium density DRAM products are used in WLANs, base stations, FTTH, DSL and cable modems, set top boxes, digital cameras, MP3, flat panel TVs, LCD TVs, HDTVs, video phones, VOIP, printers, disk drives, tape drives, audio/video equipment, GPS, telematics, infotainment, and other applications. It also designs and markets EEPROMs, SmartCards, and non-memory products.08OCT08 - $1.92
This company is a value-investor's delight:From Yahoo:
Market Cap (intraday): 51.45M
Enterprise Value (9-Oct-08): 679.02K
Trailing P/E (ttm, intraday): 6.13
Forward P/E (fye 30-Sep-09): 6.40
PEG Ratio (5 yr expected): 0.77
Price/Sales (ttm): 0.21
Price/Book (mrq): 0.33
Enterprise Value/Revenue (ttm): 0.00
Enterprise Value/EBITDA (ttm): 0.089
http://finance.yahoo.com/q?s=ISSI
From MSN Money
Price/Cash Flow: 3.40
http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=PriceRatios&Symbol=ISSI
No insider buying lately.
Before getting goo-goo eyes over the PE and EBITDA, note that last year's earnings were not based on normal operations (see discussion below).
Book value is almost all tangible; price/tangible-book: 0.40
It has $136 million in current assets (cash and cash-like assets), compared to a market cap. of $51 million. Current ratio is almost 3 (good), and the company has been buying back its own shares lately, so there's no immediate need to raise cash.
It does have a lot of illiquid long-term investments (ARS)....
"Included within our investment portfolio are $20.0 million par value of AAA rated investments in auction-rate securities, for which all of the underlying assets are student loans which are backed by the federal government under the Federal Family Education Loan Program. .... As the liquidity of these securities has been negatively impacted by the uncertainty in the credit markets, we have classified these auction-rate securities as long-term available-for-sale securities as of June 30, 2008. We currently believe these securities are not permanently impaired, primarily due to the government backing of the underlying securities. However, it could take until the final maturity of the underlying notes (up to 40 years) to realize our investmentsŐ recorded value. Therefore, as of June 30, 2008, we recorded a temporary impairment charge of $1.1 million against other comprehensive income in our consolidated balance sheet. If the issuers are unable to successfully close future auctions and their credit ratings deteriorate, we may be required to further adjust the carrying value of these investments and record an impairment charge to earnings for an other than temporary decline in the fair values. Based on our ability to access our cash and other short-term investments, our expected operating cash flows, and our other sources of cash, we do not anticipate the lack of liquidity on these investments will affect our ability to operate our business as usual.
Nine Months Ended June 30, 2008 Compared to Nine Months Ended June 30, 2007
"Net Sales . Net sales decreased by 1% ... principally due to a decline in sales of our ASSP products specifically our Flash controller products and a decline in DRAM revenue partially offset by an increase in SRAM revenue. An increase in unit shipments of our DRAM products in the nine months ended June 30, 2008 compared to the nine months ended June 30, 2007 was offset by a decline in average selling prices for such products...
"In the nine month periods ended June 30, 2008 and 2007, no single customer accounted for over 10% of net sales.
"We have incurred significant losses in certain recent periods, and there can be no assurance that we will be able to maintain profitability in the future....Though we were profitable in fiscal 2007 and in the first nine months of fiscal 2008, we incurred inventory write-downs of $10.3 million and $8.0 million in such periods, respectively, and we would not have been profitable in fiscal 2007 except that we achieved significant income from non-operating activities such as gains on the sale of investments and interest income in such fiscal year.
" We have significant international sales and operations and risks related to our international activities could harm our operating results....In the nine months ended June 30, 2008, approximately 16% of our net sales was attributable to customers located in the U.S., 17% was attributable to customers located in Europe and 67% was attributable to customers located in Asia. In fiscal 2007, approximately 18% of our net sales was attributable to customers located in the U.S., 15% was attributable to customers located in Europe and 67% was attributable to customers located in Asia. In fiscal 2006, approximately 17% of our net sales was attributable to customers located in the U.S., 10% was attributable to customers located in Europe and 73% was attributable to customers located in Asia. We anticipate that sales to international sites will continue to represent a significant percentage of our net sales. Although our international sales are largely denominated in U.S. dollars, we do have sales transactions in New Taiwan dollars, in Hong Kong dollars and in Chinese Renminbi. In addition, our wafer foundries and assembly and test subcontractors are in primarily located in Taiwan and China. A substantial majority of our employees are located outside of the U.S and the expenses for our foreign operations are generally denominated in local currency. As a result, a devaluation of the New Taiwan dollar or Chinese Renminbi could substantially increase the cost of our operations in Taiwan or China.
Thoughts: it depends on consumer discretionary products, which are not a good thing to depend on right now. Sales have been flat or slightly declining in the last year. The balance sheet is superb, and it is heartening that unit sales increased (even though prices declined). If the product stays relevant, this is probably a good pick to weather the storm. Possibly, a good buyout candidate. In normal economic conditions, it would be grossly oversold.
22NOV08 - $1.44
Relatively small insider buying in November, including the CFO.Thoughts: It's gotten pretty cheap, but other companies have gotten even cheaper.
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