Monolithic Shares Strategy For Transition Away From Consumer SegmentTim Kennedy (Author) Published Date : Jun 20, 2014 09:48 ET
Meera Rao, chief financial officer, presented at the 34th Annual Growth Stock Conference in Chicago this week. Overall, the tone of the presentation was positive, and management highlighted a variety of growth prospects for the company.
In addition to sharing the company strategy for its transition away from its consumer segment to longer product cycles focused on infrastructure (such as telecommunications, industrial, and storage and computing), the company was also bullish on its emerging module business.
Management continues to believe it is at least a year or two ahead of the competition on this front, and given the different iterations of its module product (that differ in voltage and amps), the company will be able to address a wide variety of end-markets.
Bottom line, we continue to be positive on the company and see a path for the company to triple its revenue as it reverts to its historical 8% to 10% penetration of its addressable market (which is currently $6 billion, up from $2 billion).
We maintain our Outperform rating. Management highlighted key reasons for Monolithic Power maintaining its technology and market leadership. While the company competition is able to offer only discrete solutions (that include multiple chips and are less power efficient), Monolithic Power is able to differentiate its products by providing customers integrated solutions with superior performance.
Management noted the company technology is well ahead of the rest of the analog market and we believe its competitive leadership is sustainable over the near term.
Management also noted that the company Monolithic Power Module (MPM) solutions are roughly two years ahead of the competition and are expected to help drive growth over the next several years. The company competitive advantage with its MPM solutions stems from its ability to integrate its technology onto a single chip (versus discrete solutions using multiple chips) and the fact that its modules are 90% smaller than other offerings.
We are incrementally bullish on the company prospects in this segment moving forward and expect a significant revenue contribution from modules in 2015 (following the initial launch in the second half of the year).
Monolithic Shares Strategy For Transition Away From Consumer Segment