Showing posts with label U-Nav. Show all posts
Showing posts with label U-Nav. Show all posts
SiRF - down but not out
Wednesday, February 6, 2008
SiRF plummeted to $7.36 (almost a 55% drop) yesterday prompting a wave of articles in the internet replete with puns about the GPS company. This was also compounded by a spate of analyst downgrades (I think seven in total) reducing the target price to $10 from around $30. Reason: A missed quarter earnings report and an uncertain forecast for the next quarter.
While it seems to have come as a major surprise to many analysts who were very bullish about the company earlier, it does not to me. Here is a link to my article back in July where I discuss the tough position that SiRF finds itself in. I wish to re-analyze that article here. Here is the thesis statement I made there -
"I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider."
I followed it up with these reasons -
While it seems to have come as a major surprise to many analysts who were very bullish about the company earlier, it does not to me. Here is a link to my article back in July where I discuss the tough position that SiRF finds itself in. I wish to re-analyze that article here. Here is the thesis statement I made there -
"I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider."
I followed it up with these reasons -
- interest shown by cellular companies in GPS: This was even before Atheros made a smart move picking up U-Nav (incidentally, I had stated then that U-Nav would be acquired too) and NXP got GloNav. I also mentioned that SiRF with its $2 billion market cap (then) was too big to be acquired. Now the company finds its value almost reduced to a fourth of that valuation.
- Other companies wanting to grad more silicon: That left SiRF as more of a one-trick pony!
- 'Keep the Bill of Materials low' dictum: Effectively, with more competition comes lower margins. This was something I saw as a critical issue that faced SiRF. Today, this has shown its ugly face with a reduced gross margin that has got the Street scampering.
I concluded that piece stating "So, in summary, I think that if SiRF is not able to make strides in the mobile world in terms of getting a major customer or by diversifying, it runs the risk of being marginalized. If the future is in cellular mobile communications, and each cellular company has its own GPS solution, then it is only a matter of time before the concerted research and development of mobile GPS devices fructifies and begins to displace traditional GPS devices."
If SiRF is not wary about the growing influence of mobile GPS, then it could lead to a downward spiral. The Street is perhaps justified in its reaction - the reality about the company and the GPS market sank in only now. The threshold to push to stock up is also likely to be quite high. While it is clear that mobile vendors like Qualcomm, TI, NXP and Broadcom will now go for their proprietary GPS chipsets effectively shutting out SiRF from a majority of the mobile market, a good portion of the convergence device market is still open for it to battle with the other smaller players. Even there, the battle will be tough given that companies like Atheros will now strive to bundle their GPS offerings with other peripheral technologies such as bluetooth and WLAN. So it remains to be seen how the company wishes to address this situation now.
The company needs some good design wins in the mobile space now to re-infuse investor confidence. And there is potential. It acquired Centrality Communications for a better positioning in the mobile market. Besides, it has active collaboration efforts with Intel for GPS in laptops, which is not bad considering Intel's path-breaking effort as the core of the Apple Air. If my suspicion is right, we will see more Intel processors in Apple's future convergence devices with smaller form factor than the Air. This bodes well for SiRF.I also think there is a strong possibility that Intel may make a move to buy SiRF.
So, while I am not surprised that the stocks plunged, especially given the reasons that led to the fall, I do think that $7.5 is a little too harsh. It will make a slow recovery this year but will perhaps never see the $40 highs of the past. The company has a strong patent portfolio and is still the GPS leader. Although the lack of diversification has come back to bite it, a strong alignment with a mobile vendor should do its fortunes a lot of good. With its technology leadership, I think it will overcome this crunch. It is down now, but not out yet!
Read the full article>>
If SiRF is not wary about the growing influence of mobile GPS, then it could lead to a downward spiral. The Street is perhaps justified in its reaction - the reality about the company and the GPS market sank in only now. The threshold to push to stock up is also likely to be quite high. While it is clear that mobile vendors like Qualcomm, TI, NXP and Broadcom will now go for their proprietary GPS chipsets effectively shutting out SiRF from a majority of the mobile market, a good portion of the convergence device market is still open for it to battle with the other smaller players. Even there, the battle will be tough given that companies like Atheros will now strive to bundle their GPS offerings with other peripheral technologies such as bluetooth and WLAN. So it remains to be seen how the company wishes to address this situation now.
The company needs some good design wins in the mobile space now to re-infuse investor confidence. And there is potential. It acquired Centrality Communications for a better positioning in the mobile market. Besides, it has active collaboration efforts with Intel for GPS in laptops, which is not bad considering Intel's path-breaking effort as the core of the Apple Air. If my suspicion is right, we will see more Intel processors in Apple's future convergence devices with smaller form factor than the Air. This bodes well for SiRF.I also think there is a strong possibility that Intel may make a move to buy SiRF.
So, while I am not surprised that the stocks plunged, especially given the reasons that led to the fall, I do think that $7.5 is a little too harsh. It will make a slow recovery this year but will perhaps never see the $40 highs of the past. The company has a strong patent portfolio and is still the GPS leader. Although the lack of diversification has come back to bite it, a strong alignment with a mobile vendor should do its fortunes a lot of good. With its technology leadership, I think it will overcome this crunch. It is down now, but not out yet!
Posted by
Vijay Nagarajan
at
2:00 PM
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comments
Labels: Apple, Atheros, BroadCom, global locate, GPS, NXP, QualComm, sirf, U-Nav
NXP picks up GloNav
Friday, December 21, 2007
NXP buys GloNav for US$85 million in cash plus up to US$25 million in cash contingent upon revenue and product development milestones over the next two years. This is close to the heels of Atheros buying u-Nav. Like I have said before, this is a move to give mobile customers a more integrated solution. NXP already has FM ad Bluetooth capabilities. This is a required piece in its portfolio. With one more small GPS player out of the market, Freescale and Marvell have time running out.
Read the full article>>
Posted by
Vijay Nagarajan
at
9:00 AM
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Labels: Atheros, freescale, GloNav, GPS, marvell, NXP, U-Nav
Atheros and the u-Nav gambit
Monday, December 17, 2007
I have, so far, refrained from expressing my opinions about my company, Atheros Communications (ATHR). But late last week, we announced that we will acquire u-Nav Microelectronics for $54 million that includes $15.4 million in cash and 1.28 million shares of Atheros common stock. This news has forced me out of my silence.
Firstly, I am happy that Atheros has added an extremely important strategic piece to its portfolio. I have, in my articles dating back to July, mentioned that the future of wireless is in integration-the ability of the same wireless chip or card to support multiple technologies. Qualcomm has been a traditional champion of this notion. Whether it is Snapdragon, its omnipotent chipset or its
Secondly, it signifies a bigger consolidation of the wireless industry and its various components. While I will not glorify this acquisition, I do wish to emphasize that the future survival of a wireless company is contingent on its portfolio expansion. These companies can no longer afford to be one-trick ponies. Thus, we are likely to see some significant trends through the next couple of years.
- Mobile companies shopping for other GPS companies: The problem is that not many small players with competitive solutions are available in the market today. Few names that crop up include SkyTraq, CellGuide, NemeriX etc. It will be interesting to see players like Marvell, NXP and Freescale get GPS capabilities.
- Companies may exit 3G space: A lot of the GPS action has taken off along with 3G technologies. The consumer also wants powerful devices. With the market slowly consolidating on the mobile side, players like Qualcomm and TI will thrive while Broadcom, STM and Infineon (each of whom have GPS in their kitty) could take a part of the pie, especially with interest from vendors such as Nokia and Apple. For the others, it is a do-or-die situation. If they cannot acquire GPS capabilities, they cannot be competitive and hence risk losing out in this space. This in turn implies a further consolidation of the market with companies announcing their exit slowly.
- More technology integration: We have a list of mobile broadcasting standards that fall in this list. SiRF, for example, complements its GPS core competence with DVB-H capabilities it acquired through TrueSpan in 2006. Qualcomm’s Snapdragon platform can integrate most broadcasting standards. We also have integration across multiple standards as demonstrated by
Thus, the next two years will be fairly crucial for a lot of the wireless players. As for Atheros, at a price of $54 million, it won itself an entry into an important technology market, a good product, good engineering expertise and a ticket to the wireless future.
Posted by
Vijay Nagarajan
at
8:00 AM
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Labels: Atheros, CellGuide, DVB-H, freescale, Gobi, marvell, NemeriX, QualComm, sirf, SkyTraq, Snapdragon, U-Nav
The case of Sirf
Monday, July 30, 2007
While I will continue to write about the integration of wireless technologies, in this article I wish to digress a little bit to discuss a company that might be impacted by such technology consolidation - SiRF.
SiRF, as I have briefly hinted in a previous article, like many other companies finds itself at cross-roads now. It has been the leading GPS chip-set maker supplying to almost all the major GPS vendors. Most Garmins and Tom-Toms that we would pick from store-shelves have SiRF inside. This being said, I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider.
First and foremost reason is the recent spate of interest that the wireless companies have shown in small GPS firms. BroadCom, after surfing the waves for a while, decided to pick Global-Locate for its GPS needs. I am sure that other companies like U-Nav are up for grabs. Watch out for Marvell or Free-scale, as they are likely to pounce on such companies too if they come cheap enough. This puts SiRF with around $2 billion of market cap in a weird situation: While most of these wireless companies prefer to buy cheap and then build on it using internal resources, SiRF is too big to be acquired.
Secondly, is this concept of grabbing the most silicon in a platform. The wireless companies, with their own solutions, are likely to be better positioned to be able to achieve this than SiRF. SiRF will have to eventually come up with its own "bundle" if it has to be attractive to platform vendors. It has indeed made some strides with DVB-H and also media capabilities with the acquisition of Centrality. But, that still is only a limited number of eggs in its basket. Snapdragon, for example, offers DVB-H, SMDB and Media-Flo all in a bundle for the vendor to be able to pick-and-choose based on the market.
Thirdly, it is the "keep the Bill of Materials (BoM) low" thought. Any algorithm is good only to the point of making economic sense. SiRF's path-breaking algorithms are no longer attractive at the form-factor and costs being discussed in the mobile world unless it can leverage its technological leadership in the GPS field to always stay ahead. It would have to give a cheap and good product while also keeping the time-to-market low for the OEM.
Some may argue that all is not bad for SiRF. After all, its GPS expertise extends beyond mobile applications. The form-factors dictate algorithmic limitations with mobile phones, a situation not true for other devices. This, they argue, implies that the mobile GPS services are unlikely to supplant the market for the traditional GPS devices. My point is that technology as a whole is gravitating to a single device that can do most functions, not necessarily in an optimal sense. As an end-user, I would rather buy a single device that can do GPS, perhaps blue-tooth while along with being a cell-phone rather than buy 2 or maybe 3 devices separately. Note that I am not talking about having Wi-Fi and other data-related technologies that could further the attractiveness of such a unified device.
So, in summary, I think that if SiRF is not able to make strides in the mobile world in terms of getting a major customer or by diversifying, it runs the risk of being marginalized. If the future is in cellular mobile communications, and each cellular company has its own GPS solution, then it is only a matter of time before the concerted research and development of mobile GPS devices fructifies and begins to displace traditional GPS devices.
Read the full article>>
SiRF, as I have briefly hinted in a previous article, like many other companies finds itself at cross-roads now. It has been the leading GPS chip-set maker supplying to almost all the major GPS vendors. Most Garmins and Tom-Toms that we would pick from store-shelves have SiRF inside. This being said, I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider.
First and foremost reason is the recent spate of interest that the wireless companies have shown in small GPS firms. BroadCom, after surfing the waves for a while, decided to pick Global-Locate for its GPS needs. I am sure that other companies like U-Nav are up for grabs. Watch out for Marvell or Free-scale, as they are likely to pounce on such companies too if they come cheap enough. This puts SiRF with around $2 billion of market cap in a weird situation: While most of these wireless companies prefer to buy cheap and then build on it using internal resources, SiRF is too big to be acquired.
Secondly, is this concept of grabbing the most silicon in a platform. The wireless companies, with their own solutions, are likely to be better positioned to be able to achieve this than SiRF. SiRF will have to eventually come up with its own "bundle" if it has to be attractive to platform vendors. It has indeed made some strides with DVB-H and also media capabilities with the acquisition of Centrality. But, that still is only a limited number of eggs in its basket. Snapdragon, for example, offers DVB-H, SMDB and Media-Flo all in a bundle for the vendor to be able to pick-and-choose based on the market.
Thirdly, it is the "keep the Bill of Materials (BoM) low" thought. Any algorithm is good only to the point of making economic sense. SiRF's path-breaking algorithms are no longer attractive at the form-factor and costs being discussed in the mobile world unless it can leverage its technological leadership in the GPS field to always stay ahead. It would have to give a cheap and good product while also keeping the time-to-market low for the OEM.
Some may argue that all is not bad for SiRF. After all, its GPS expertise extends beyond mobile applications. The form-factors dictate algorithmic limitations with mobile phones, a situation not true for other devices. This, they argue, implies that the mobile GPS services are unlikely to supplant the market for the traditional GPS devices. My point is that technology as a whole is gravitating to a single device that can do most functions, not necessarily in an optimal sense. As an end-user, I would rather buy a single device that can do GPS, perhaps blue-tooth while along with being a cell-phone rather than buy 2 or maybe 3 devices separately. Note that I am not talking about having Wi-Fi and other data-related technologies that could further the attractiveness of such a unified device.
So, in summary, I think that if SiRF is not able to make strides in the mobile world in terms of getting a major customer or by diversifying, it runs the risk of being marginalized. If the future is in cellular mobile communications, and each cellular company has its own GPS solution, then it is only a matter of time before the concerted research and development of mobile GPS devices fructifies and begins to displace traditional GPS devices.
Posted by
Vijay Nagarajan
at
11:23 PM
0
comments
Labels: BroadCom, global locate, GPS, QualComm, sirf, Snapdragon, U-Nav
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