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May 01, 2009
Entropic Communications Inc. (ENTR - US$ 1.86) 2-Equal weight
Earnings Review/Sales Analysis
1Q in Line; New MoCA Ramps 2H09
Post close, Entropic reported March Q results
broadly in line with ests & provided encouraging
update on 2 new operator deployments (TWC &
Cox) of MoCA to drive revs in 2H09 & 2010.
Encouraged by new rev streams & focus on costs
& consider valuation ~.8x sales may offer support
but with visibility on timing still somewhat uncertain
& modest cash balance, keep 2-EW at present.
1Q sales $24M in line with better GM of 52.4%
helping EPS $0.06 vs Street $0.07.
2Q guide in line with sales up 4-8% QoQ on better
MoCA as VZ demand returns after aggressive
inventory work down offsetting seasonal
weakness in the satellite DBS segment. Solid
focus on opex, guided $2M lower in June. We
model $25.5M with 51.5% GM & -$0.02 EPS.
Looking ahead, encouraged by recent
announcements by TWC & Cox. Should provide
incremental rev streams in 2H09 & 2010. We
believe the competitive landscape remains
relatively favorable with BRCM unlikely to erode