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PebbledsPicks (75.78)

November 2008

Recs

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November 2008 O2Micro International Ltd. (OIIM)

November 01, 2008 – Comments (1) | RELATED TICKERS: OIIM

O2Micro International Limited, a fabless semiconductor company, together with its subsidiaries, designs, develops, and markets analog, digital, and mixed-signal integrated circuits, and semiconductor devices for power management, mobile, and security applications, as well as provides systems security solutions in consumer electronics, computer, industrial, and communications markets. The company develops intelligent security software solutions, and silicon products and other engineered multi-layered structures for integrated circuits; and provides semiconductor assembly and testing services. Its products include intelligent lighting, battery management, power management, SmartCardBus, and security products, such as VPN/firewall system solutions. O2Micro International also licenses its intellectual property to third parties. Its products are used in liquid crystal display (LCD) notebook computer panels, LCD televisions, LCD monitors, and LCD panels for global positioning systems.

Comments: Long-term demand for LCD will probably trend down and die a long, hideous death, but that will take time. In the meantime this company appears to be way too cheap (hey, I could pick just about any stock this month and do OK in the next year!).  Revenues have steadily increased for ten years, they're profitable, margins are excellent, gross margins are a whopping 58%, tons of cash, no debt, good insider ownership.  No matter how you look at it this company looks too cheap.  As Bill Mann recently wrote on the HG Philosophy board, "Your neutral position should be to assume that the market has it right, not wrong."  That's good advice, but perhaps the market has discounted OIIM too much due to short-term fears of depressed demand for all things consumer tech.  OIIM bottomed a few days ago and is up 50% in just three short days.  Volatility will still reign for quite some time, but I think OIIM will recover nicely as the market comes to its senses.  [more]

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