Thursday, September 13, 2007

Trade Update - SiRF Technology (SIRF)

I have traded and recommended SIRF on and off for a couple years now (see archives), and have been very profitable. But my most recent trade did not work out as well.

The stock has come down quite a bit, mostly on pricing concerns as ASPs fell quicker than expected and hurt margins. Also, the rollout of location-based services (LBS) among wireless carriers was delayed, and this was supposed to be a big area of growth.

Today, the stock is spiking +9% higher on some good LBS news - finally. Motorola (MOT) has a new handset out, and it is believed to have SIRF chipsets in it. This is good news, and is certainly helping the stock. I held on to my position when it fell into the upper teens, as I felt it was simply too low to sell.

But on today's bounce, I am letting go of my positions. The stock could enjoy more of this relief rally, but I am not sure how long it lasts. I think the pricing pressure is still there, and there is also growing competition from large competitors such as Broadcom (BRCM).

The stock has certainly been a laggard this year, especially when compared to some other stocks in the GPS space, such as Navteq (NVT) and Garmin (GRMN). I think both of these stocks make better swap candidates, and would look to get into one of them on a pullback.

sold SIRF


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