Taking Your Communication Speed To The Next Level!

This Company has it all… exciting technology, phenomenal growth, and great near term catalysts.  Take a closer look at:

Mindspeed Technologies (NasdaqGS: MSPD)

 

QUICK FACTS

Ticker:                                         MSPD

Industry:                                      Semiconductors

Recent Price:                               $8.73

Market Cap:                                 $292.5m

Shares Outstanding:                     33.5m

Average Volume:                          216,072

Dividend Yield:                             N/A

Website:                                     www.mindspeed.com

 

COMPANY ANALYSIS

Mindspeed Technologies (MSPD) is on the hardware side of the IT world.  They’re the people keeping our information flowing.  That’s a pretty important role in an economy that depends so heavily on instantaneous communications.  Their three product bases are Processor-Based Solutions, Analog Solutions, and WAN Communications.

Simply put, if it weren’t for companies like MSPD, we’d still be working at dialup speeds.  They provide the hardware and applications that allow businesses to process and store the information going into and out of communications systems faster and more efficiently.

Put simply, if you’re reading this report from your email or on the web, the information probably made its way through a piece of equipment using Mindspeed’s technology.

 

FINANCIAL ANALYSIS

Mindspeed’s revenue has stayed steady over the past year.  That’s pretty astounding considering how difficult the economic environment has been.  As of the latest quarter, the company reported revenue of $38.6 million… up slightly from the same time last year.

In addition, the company announced gross margins increasing to 63.1%.  And Non-GAAP Diluted Earnings per Share of $0.01.

MSPD also has a very strong balance sheet with more than $44.9 million cash on hand.  Best of all, management recently announced they expect to grow revenue 7% to 11% next quarter!

 

KEY METRICS ANALYSIS

Trailing P/E:                             15.2x

Price / Sales:                           1.6x

Return on Assets:                    15%

Insider ownership:                     6.2%

Short Ratio:                              4.1x

Current Ratio:                           2.7x

Total Debt To Equity                  22.5x

 

RECENT EVENTS

Mindspeed was having a rough year in 2008.  Things were looking pretty grim until a new CFO, Bret Johnson, rode into town saving the day.  Mindspeed credited their recent financial turnaround to Johnson’s influence.

Like the tall handsome hero in every western movie, now that Johnson’s work is done, he’s riding off into the sunset.  Johnson was replaced by 15-year Mindspeed veteran Kristen Schmidt.

In other news, Fiberhome Telecommunications, which specializes in – you guessed it – Telecommunications, announced their decision to use Mindspeed’s large crosspoint switch in their next-generation Optical Transport Network (OTN) product line.  It sounds complicated… and it is.  All you really need to know is that leading telecom companies are snapping up MSPD products.

 

MANAGEMENT TEAM

Raouf Y. Halim – CEO & President

Kristen M. Schmidt – Interim CFO

Thomas J. Medrek – Sr. Vice President & GM

Gerald J. Hamilton – Sr. Vice President

Kurt F. Busch – Sr. Vice President & GM

 

STOCK ANALYSIS

Despite a depressing month in the markets MSPD stock is continuing its strong move higher.  In early January the price crossed above the 50-day moving average.  In February it blasted up above the 200-day.  Most importantly the 50-day crossed above the 200-day in late March. These are all strong buy signals for this stock.  The stock continues showing good strength, even in a weak market!

 

 

 

 

 

 

 

 

Chart Courtesy of stockcharts.com

MSPD’s 52-week low was $5.25 and the 52-week high was $9.66.  Right now the stock is trading at $8.73 well above the 50-day moving average near $8.45 a share and the 200-day moving average of $7.44.  The company has a market cap of $291 Million and 33.5 million shares outstanding.

 

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