Thursday, November 01, 2007

Sirf Technology Holdings Inc. may have swung to a third-quarter loss

SAN FRANCISCO (MarketWatch) -- Sirf Technology Holdings Inc. may have swung to a third-quarter loss, but the GPS chipmaker's results were good enough for investors to throw enough of their weight behind the company's stock to send the shares up almost 28% by the time the market closed Wednesday.


Sirf shares rose $6.49 to close at $29.75 after the company said late Tuesday that it lost $16.1 million, or 28 cents a share, on $91.2 million in revenue for its third quarter. Normally, such a loss would send a company's shares into the red, especially since last year, Sirf earned $2.6 million, or 5 cents a share, on sales of $63.7 million.

But since Sirf's loss was caused mainly by a series of one-time charges related to items such as research and development and stock options, investors were willing to give the company a free pass. Excluding those items, Sirf would have earned $17.6 million, or 29 cents a share, which topped the consensus estimates of analysts surveyed by Thomson Financial, who forecast a profit of 22 cents a share on $85.7 million in revenue

Sirf said its results were helped by growth in its automotive business and particularly in portable navigation devices. Analyst Brian Modoff, of Deutsche Bank, said that while Sirf wouldn't comment on its share of the automotive market, "we believe their share has stabilized and may have grown in the quarter." Modoff believes that Sirf's shipments to GPS customer Tom Tom N.V. should help Sirf solidify its position in the market for car-based GPS systems.

Modoff holds a buy rating and raised his price target on Sirf's stock to $35 a share from $30.
Jeffries & Co. analyst Adam Benjamin also lifted his price target on Sirf's stock to $32 from $28 a share and left his buy rating on the stock intact.
Benjamin said that he believes Sirf's strength in the automotive market will help it offset some delays in the company's wireless business, which may experience some delays in deals over the coming months. However, Benjamin said that wireless sales should improve with deals involving Research In Motion Ltd. and Motorola Inc. adding to Sirf's wireless revenue.
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