Synaptics, Incorporated (SYNA) is a Winning Pick, but Wait for the Pullback

Page 1 of 2

When Synaptics, Incorporated (NASDAQ:SYNA) bottomed in November late last year, the uptrend that followed was not entirely unexpected. Synaptics is a leader in the touch-screen space, and the company solidified its position with design wins in the market place. For 2013, this growth in display integration solutions is expected to continue. The ForcePad and ThinTouch are design wins that are scheduled to be made available later this year.

Synaptics, Incorporated (NASDAQ:SYNA)PC in the Doldrums: No Problem for Synaptics, Incorporated (NASDAQ:SYNA)

Synaptics shares were previously held back by the gloomy outlook for the PC market. Ultrabooks did not boost sales as hoped, while tablet demand simply continued to grow, which partly contributed to the weakness in the notebook market. For Synaptics this was bad news, yet laptop computers are not going away any time soon. Sure sales growth was negative, but the industry is an opportunity for specialist plays like Synaptics. Synaptics is expecting that its share of the ultrabook market in 2013 and 2014 will grow, thanks to the introduction to its ForcePad and ThinTouch technology.

Strong Mobile Segment

Synaptics benefited from strong growth in mobile phone and touchscreen applications. Last quarter (for the December quarter), revenue of $143 million was helped by this segment. Non-GAAP gross margins were 48.4%, and the company ended the quarter with non-GAAP earnings of $0.53 per diluted share.

Growth in China

Investors all but expect China to be an important market for the smartphone market. For Synaptics, this is no different: 60% of OEM smartphones were in China. Synaptics has a leadership position in this industry through domestic OEMs that include ZTE, Huawei, and Lenovo.

2013 Outlook

Synaptics thinks that it could grow its market share in ultrabooks this year. Last year, its TouchPad solutions were in 7 out of the 10 top ultrabooks (as ranked by PC Magazine).  The fact that it’s incorporation in Microsoft Corporation (NASDAQ:MSFT)’s Windows RT, Hewlett-Packard Company (NYSE:HPQ)’s Envy x2, and Dell Inc. (NASDAQ:DELL) systems illustrates just how ubiquitous TouchPad solutions is.

Much of the growth in the PC segment will depend on Microsoft and HP. Both companies need to better articulate the benefits of upgrading to a Windows 8-based touch device. Microsoft will be releasing the “Pro” version of the Surface tablet this year.  Although pricing may turn-off buyers, the “Pro” is more complete, and Windows-based software is supported.

HP recently updated the Envy mode, and the new Spectre XT TouchSmart showcases the strengths of Synaptics. Although the laptop could have a better battery life, the touch-interface was well-received by reviewers.

Synaptics currently has a backlog of around $79 million. When customer forecasts and product mixes are considered, Synaptics anticipates revenue will be between $140 million and $148 million in its next quarter ending in March. Gross margins will remain strong at around 47%-48%. The company expects earnings to be $0.50 to $0.58 per diluted share (non-GAAP).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!