Earning update: Mindray, GSIT

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As I talked in my previous post (a while ago), this is the little semi-conductor (very fast SRAM) stock (Nasdaq: GSIT) I bought a year ago at its IPO. Since its IPO it reported two disappointing quarters at first, more recently it reported two decent quarters (Fiscal Q4, Fiscal Q3). But I sold it this morning due to the following:

1) Lack of liquidity: the daily volume on this stock is thin because of lack of institutional support. Basically if I want to sell, the day after earning report is a good time because of the volume spike.

2) Fundamental: I am still no expert on this SRAM and Semi after holding it for one year. But I felt Semi is a tough business in general. Just look at the leaders in Semi such as Intel and NVDA, they make money by volume (while cutting prices). They are also cyclical. People used to say they are commodity business. But if you do grocery shopping, you know the real commodities (eggs, milk, bread…) all raised the price (a lot!) in past year. In other words, compared to food, chips have no pricing power.

The only way for Semi/chip industry to make money is sell more (to offset the R&D, marketing cost). Intel and NVDA can do that by selling more PC and laptops. But GSIT can not duplicate that easily because they derives 30% sales from Cisco, and we know that revenue is relatively flat in last two quarters ($4.0 million). Separately, Cisco is expected to grow revenue at 12% to 17% in next few years. So only if Cisco uses more SRAMs or GSIT finds new markets for SRAMS, the growth for GSIT will be low teens…

Mindray (NYSE:MR) reported its first quarter results yesterday, and they got good number. Unfortunately I no longer have the stock: sold my last few shares on April 3. Remember rule No. 2: stock usually goes up after I sold it?

MR Mindray Medical International… Sell Mar 17, 2008 65.00 25.93 7.00
MR Mindray Medical International… Sell Mar 17, 2008 51.00 25.58 7.00
MR Mindray Medical International… Sell Apr 3, 2008 60.00 31.88 7.00

Seriously, I still hold my previous view on MR: at $39 and PE=52, with growth rate of about 45%, it is fully valued.

Interestingly, the company announced it will switch the financial reporting currency from RMB (CNY) to USD. Besides its offically stated reasons, I think there is another compelling reason for them to do so. Can anybody tell me what is that reason?

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