Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Skid
Many thanks, I appreciate that :))
The Silicom article is the result of 4years of holding the company + every day following closely silicom mgmt and other PMs/Silicom investors. I think the result was nice ;)
About Enet, I have not changed my views. Everything according to plan. Maybe would use 65M shares vs 60M. I've been approaching management to hold a public call this month but no idea what are them going to do finally.
As a reminder, my Enet long-term bear case (assuming the company survives) is $25M at a 30% NPM or EPS 8.24p. At 20x that's 160p per share excluding net cash and dividends paid.
Let's see...
Sergi, congratulations on the article.
As I have worked for a number of US listed technology companies I have been a big fan of seeking alpha over the years, using it to understand competitors and markets.
The quality of contributions from "amateurs" puts the vast majority of brokers and so called professionals in the shade who do not understand the technology, competitive positioning and value to the customer.
Looking forward to you updating your ENET paper which is required reading for all potential holders, would like to see whether you have changed your matrix of potential share valuations based on recent events - possibly wait for another rns or two?
Congratulations Sergi on your seeking alpha contributor status. Next piece of analysis will be Ethernity I assume.. :)
That's Nokia according to my research and some of my contacts!
https://sec.report/Document/0001178913-21-001637/
Article re Tarana from last year. Note ‘massive scale’
Company founder and Chief Operating Officer Sergiu Nedevschi stated, “We are thrilled to commence the manufacturing of our proprietary integrated circuits and we are in the process of finalizing our cloud-based controller, which will enable ultra-fast deployment of our radio platform at massive scale. As we look to bring our commercial products to market later this year, the overwhelming positive response from operators running their own Tarana-based pilot networks has reinforced both the transformational nature of our technology and the pressing market need for such a solution.”
https://www.nasdaq.com/press-release/tarana-secures-first-%2424-million-of-new-%2460-million-equity-financing-2020-02-20
Thanks TL, recurring revenues are great. On those sort of figures then not hard to see just the Tarana bit valued in £’s wrt ENET sp. Be interesting when/if Tarana float on Nasdaq, I understand that’s the plan. Food for thought re spinning out that part to Tarana, attractive idea on the face of it.
Potentially ENET shareholders could get a divi/cash pay out/Tarana equity which would be nice plus still get to keep the 5G upside.
Let’s hope Tarana is a fantastic success!
Uhif a royalty element would be very normal in the case of this type of product. Like a license to use the technology exclusively.
I see no reason why $50m turnover at high margin is not possible in 12-24 months with a game changer product like this. Tarana are expecting huge income and a bit of that will go to Ethernity. Don't forget Tarana are valued at many multiples of Ethernity. They could buy Ethernity with pocket change or a spunof Ethernity wireless
Wow TL re 4-5k units a month in c 12 months time.
Tarana would be on a roll, 2m-2.5m homes being installed a month. But there’s a global market to go for, so why not?
That could be $48m to $60m revs to ENET at $1k a pop.
Be good if there’s some element of recurring revenue/royalty in there, think that has been suggested.
At high margins, that sort of business must be worth pounds in terms of the sp. Exciting times ahead to see how the Tarana roll out goes.
GLA
skid
Yes, Silicom is a growth company trading at a value multiple. Strong net cash positions and buying back shares over the last few years.
The stock was hit in 2014 & 2018. They were selling basic NICS & others (legacy) and the sector, as you know, is declining because offload and programmable NICS are taking the market. Also, they had a higher GM in this legacy segment (40%) vs now that it is going to be 32-34% in FPGA, NFV & O-RAN.
In march 2018 they lost a big contract that was starting to ramp-up ($75M/yr) with IBM because they had internal issues (stock -50%); the new markets that were targeting (SD-WAN and FPGA) did not start to ramp-up (as it was expected at that time) in April 2019. The company was hoping for SD-WAN deployments to push their growth after the IBM win being ruled out.
Then we had the pandemic in 2020, just when it was expected that the NFV delays were starting to resume finally, and it seems that now is the moment for SD-WAN, FPGA & 5G. Now we also have other solutions that they are selling for O-RAN (time sync or eASICs, and more coming).
So today the opportunity is much bigger than before but we have the components shortages that are capping the demand upside this year. Today SD-WAN & FPGA ramp-up is starting but still at a slow pace. I hope the stock will trade at $80 during 2022 if the shortages & ramp-up issue is resolved & $160 in 4-5 years, with additional optionality (in terms of price and faster growth) if FB or Dish wins are successful for them - which could be massive. But this is just optionality right now.
The market is just not watching them because of the recency & anchoring bias. 5G companies are being overlooked imho.
Also, the founder, Zohar Zisapel, (from Israel) has been selling his 20% stake from 2018, and during the last few weeks he has been selling big - which the market does not like, obviously.
The past years/decades, SILC has been very successful with 2 amazing growth periods, 2003-2007 & 2009-2013, and the stock 350x from low to high at that time. From 2014 (when the co was at 30x P/E) and onwards we had the issues I described earlier in this post, but the company paid dividends most of those years; the stock -50% in that period.
All of these is also interesting for the ENET investment case. I think and hope that ENET is like "a Silicom" in 2002 right now - obviously not 350x but 10-20x is quite possible. The networking sector has been struggling the last few years but now the opportunity with 5G and O-RAN is massive and it is the moment that all those investments bear fruits (like those that ENET has done from and pre IPO). Also I would say that there is not that much competition...
Time will tell!
imho, dyodd :))
It's important to realise that the similar or apparently similar businesses that are valued higher are in mature or expanding markets. Ethernity pre Tarana were in future markets.
Now Tarana is a current market we have seen appreciation of the share price. We'll see more from that sector as it expands, at least another 50p over the next 12 months from that. If we get 30000+ units a year +£1. I believe in 12 months we will be selling 4-5000 a month.
So as future markets become current and sales start we will see the same result on multiple product lines.
A rising trend is absolutely inevitable.
Sergi,
On silicom impressed with the strength of their balance sheet with no issues for them on funding - I was deeply surprised on the company share valuation based on the net assets especially as a tech growth company.
Assume this is because of their much lower margins than ENET which I am hoping would carry a superior premium rating vs net assets in a couple of years due to much higher margins?
Yes TL I do agree. Opportunity much bigger for enet of course but the risk is also higher.
Time will tell, but I am not aware of more opportunities like Enet.
Right now we are still derisking, the first step is to need no external financing. The last month we had the first step inside this objective.
I think it very unlikely that any end users come to Ethernity. Sales will flow through third parties and integrators. They probably won't even know Ethernity are in the supply chain.
Like Supersonic and MTN they are buying Tarana not Ethernity.
Ethernity are further upstream than Silicom. Selling largely component and part solutions.
Ethernity are in my opinion unlikely to supply end to end and really any that do are not truly open unless of course they are the best in every aspect.
I have said many times that there will be many winners. With a crazy low market cap Ethernity need a tiny share to increase the cap 10-20 fold.
Silicom is disrupting Huawei & Nokia/Ericsson monolithic & closed systems in the Open Ran infrastructure while ENET is trying to go a step further and trying to disrupt that cycle that Shaike was explaining in the call. Probably Enet's tech is better but they cannot take the market as they are quite small. So I think that in the midterm both companies can do very well...
Big operators need companies well established with a strong working capital position (silicom)
I think that Silicom still see Telecom as a succession of ASICs boxes to be replaced when obsolete. With fpga being used to bring on the solution.
That is simply wrong. It may fit their business model but we are seeing now from leaders like Ethernity solutions for 3-4 and 5G rolled together that will extend into the next generation. The reason is the hardware can be redeployed to new tasks on the fly. An installed 5G solution needs to be flexible and versatile. ASICs is inflexible and made as such purposely. Moving forward I think that we are on the last transition of ASICs and that is why they are talking about open platforms. However open doesn't mean selecting a handful of vendors that's simply collaboration.
Many areas are still using 3G and 4G and it is important to many to maintain that alongside 5G. Ethernity can do this in one solution.
In rather a confused way he is saying that fpga which is variable or individually programmable will become effectively ASICs in time.
I have long believed that mainstream systems providers will end up as mass open players. Touting the best of each stage but selling it effectively like an integrator but on a mass scale. Very easily it could be ACEnic-100 making that happen.
To be clear, I think that this "cycle" is what Ethernity wants to disrupt using only one FPGA (ACE NIC) if I am not wrong. Anything to add TRacy?
Perfect. So how do you see the competition between the ASIC and FPGA technologies on the 5G Open RAN deployments?
Shaike Orbach
Well, what we are building on is actually -- and we see this cycle happening, to a certain extent, is on some sort of a cycle, I would say. And in this cycle, we are positioned in both sites. And the cycle, the way that it goes, is that many of the acceleration functionalities, et cetera, are beginning with FPGAs. And then once it becomes more or less a standard, it becomes an eASIC simply because -- and then eASIC is actually an ASIC simply in order to save cost because this industry is, of course, sensitive to cost. But then additional requirements and additional performance which are needed, which are not included in the eASIC, comes into play into the second generation of the FPGA solutions.
And then when this becomes, more or less, standard, it comes to become an eASIC and so on and so forth. And I think that because we are working with Intel and I think that this part is a demonstration of why our cooperation with Intel is so important, because we are cooperating with Intel both on the eASIC side and on the FPGA side. So right now, for acceleration, we’re using Intel’s eASIC and that’s what we’re selling. At the same time, we’re developing together with Intel the replacement solution, which would come later with an FPGA. And then we will be proposing that.
Intel is beginning to think already about its next generation of eASIC. So -- and we are a part of these cycles, whether it’s eASIC and/or FPGA, both of which will obviously contribute to our growth and revenues.
https://seekingalpha.com/article/4423417-silicom-ltd-silc-ceo-shaike-orbach-on-q1-2021-results-earnings-call-transcript?mail_subject=silc-silicom-ltd-silc-ceo-shaike-orbach-on-q1-2021-results-earnings-call-transcript&utm_campaign=rta-stock-article&utm_content=link-0&utm_medium=email&utm_source=seeking_alpha
if you check the call you will see that the management is concerned about the critical components shortages issues, and it has a meaningful impact on SILC. What is going to be the impact for ENET? Could it be a significant risk for the Tarana deployments?
yes 01234, I did not expect that answer about Napatech. Not sure what's going on here but...
sorry I misread who disliked who.Maybe they all need to have a good Batmitzvah together and join forces!!
Great Work Sergi! nice to hear direct answers from the actual company you asked some good questions too, certainly no direct competition on the fpga front it sounds like at least. also not sure he likes napatech either lol. atb
dallo
totally agree