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IDT 2Q18 report +4

17:16 30-Oct-17

The IDT conference call is ongoing, but I think we have the important points:

• Guidance is for $215M of sales in the current quarter, which beats by $3M.

This also implies that FY guidance will exceed prior targets.  Management says IDT is entering a period of sustainable high growth stronger than any in the company's history.  All segments seeing accelerating interest, as supported by the 61% gross margin, which is set to increase by another percentage point.  Here are a few highlights:

• the memory interface products that I've harped on should set a record for the current quarter and continue accelerating from there.
• transition away from 40GB data center communications complete, new 100 & 200 GB products are being adopted faster than anticipated.
• wireless charging momentum "could not be more positive", should broaden customer base, especially in China.
• narrow-band products are garnering revenue now.  I think that bodes well for Resonant, as well as IDT.
  
• mm wave revenue a year or two off, in trials and pre-production now.
  
• more new sensor families are on the way.  In particular, massively cheaper LiDAR sensors for automated vehicles are on the way, but probably two years off.  That dovetails nicely with the communications development just cited.
• to continue the cross-company analysis, I note that IDT's new flow sensors could be useful in inkjet screen production.
  

To conclude, this is a great report, and I was negligent in omitting Integrated Device management from my excellence list over the weekend.  I can easily believe that the market will pay $30 or more per IDTI share, but that represents a hybrid PE of 20, which exceeds my acceptable valuation for a manufacturer.  As always, I'll keep an eye out for dips that could be worth buying, but I target at least 20% annualized return without requiring extreme valuation, and I don't see that from the current pricing.

Integrated Device Technology has reported results for its fiscal second quarter of 2018:

• EPS of 35 cents beats by a penny
  
• on revenue of $204.4M, which beats by $3.4M
  

Management touted many of the growth drivers that I've already cited.  The conference call starts at 4:30, and we'll see what they have to say about guidance then.

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