OK, so this one is kind of cheating again, because I’ve written about this company before. Andew Mickey of Breakaway Investor is pushing his favorite small cap technology stock again, the cell phone GPS company, and he is crowing about the fact that he stuck with it through the naysaying and watched it jump 28% when the company released earnings last week.
You’ve probably seen this one — he even quotes an article in MSN Money that said “Use all available cash to buy shares of this company.” I must say, I didn’t come across that particular writeup, but regardless, we still know who this company is …
Sirf Technologies (SIRF)
This is still the same teaser that’s been circulating for many months now, so it’s true that Mickey was on board well before the great earnings report that boosted the shares from the low-$20s to near $30. So, we can give him some credit there.
Everyone seems to think that this Christmas season will the the hot one for GPS devices in general, and many of them, particularly GPS-enabled cell phones, run on SIRF chips — so demand might be pretty good if “everyone” is correct. Hopefully, for Garmin and Sirf, the “Christmas of GPS” won’t turn out to be the “Christmas of the broke consumer.”
I know, I know, analysts have been proven wrong every time they’ve guessed that the American consumer would finally be forced to stop spending more than he or she earns … but who knows, maybe they’ll be right one of these times.
So is SIRF a good bet now that they’ve had a quarter of good earnings? Well, the answer to that in the immediate future probably lies in their tight relationship with Motorola — if you tell me that Motorola is going to have a great, popular GPS-enabled phone released in the next few weeks for Christmas, then I’ll consider buying shares of SIRF for that near-term push. I did own some SIRF options for a while, but I sold them off of the earnings boost for a quick profit so I no longer have any personal interest in this one.
If this is just a buy on the general growth of GPS-enabled cell phones, using SIRF’s chips that triangulate off of cell towers to supplement GPS location technology, then maybe it will be a great run … but I have no idea whether SIRF will continue to dominate the space as they have. It looks like in terms of market share their portion of that business has more to lose than to gain, but if the market grows overall perhaps they can continue to grow sales significantly even in the face of increased competition from Broadcom and their ilk.
Clearly, I’m no semiconductor expert — I do know that Andrew Mickey likes this one and has for quite some time. So far, he’s been right — will that continue? How about you tell me?