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IDT schedules 1Q19 report & more macro musing ?3

08:36 09-Jul-18


Integrated Device Technology has scheduled the report on its first fiscal quarter to occur after market close on July 30th.  Analyst estimates average out to EPS of 43 cents on $227M in sales, with current quarter revenue climbing to $230M. 

IDT has been hitting on all cylinders for a while now and although the good performance should continue, I will be watching this report to see how much macro factors start to take their toll.  The one segment that appears unimpeded is sensors, where IDT has expanded its gas sensor line with solutions for indoor air quality.  I'm not expecting any big hit, but virtually everything else does come with minor caveats.  Memory has the various processor parallel execution security bugs.  Wireless power faces a stagnant smart phone market, though see the 3 reasons in the last report as to why the effect here should be small, if any.  In Communications 5G is not reay yet, and the market is becoming increasingly segmented in the face of the trade wars which loom over everything else.  

Pundits wondered at the market shrugging off trade war concerns last week, but we'll see how long that lasts now that the 4th of July holiday is past.  Futures are up, but the weakening dollar makes me suspicious, particularly in the short term for dividend stocks that have been rising like CTL, AES and NYLD(A).  I'm still inclined to stay the course those while building BGCP and VOD positions very cautiously, as the EU has many a hurdle yet to clear, but I'm also watching the surprising market reaction in AMSC.  It's still badly managed and a lottery ticket, but it's a much cheaper lottery ticket, with better prospects than it was just a week ago. 

What I see in the broader market is a lot of uncertainty out there about climate, relative energy valuations, the Aramco IPO and how the associated investments play out in the shadow economy and society.  The one thing I can say with confidence is that markets don't like uncertainty, and that means that even though I see IDTI as a long-term hold, I have no inclination build my position at current prices.  As always, whether or not to take profits in such situations is a highly individual decision.