Alpha and Omega Semiconductor

Investing Strategies Abandoned Arctic Outpost #13
1

Alpha and Omega (AOSL)

In one of the corners of the stock universe that I patrol consistently on a semi regular schedule like tendency - AOSL has popped up. Now…you also to may be consistently patrolling on a semi-regular schedule the same general areas of the stock universe your very self. If so - then it is highly likely…no, entirely probable that you know more about Alpha and Omega than I do. Why? Well mostly because I consider myself something of a Semiconductor industry moron. At any rate, since some of the higher ranked services that I follow are kicking up some dust on AOSL - I thought it prudent to run through some numbers in an effort to determine if the company deserves a spot on the roster - or something like that.

A few data points:

Current Price: $45.00 (Intraday)
52 Wk Range: 19.38 - 47.45
30 Day Momentum: 48%
YTD Momentum: 72%
Market Cap: 1.3B
PE: 78.7

What AOSL says about AOSL:

“We pride ourself in our expertise in all areas of power semiconductor technology and business operations. Our intellectual property and technical knowledge encompasses the latest advancements in the power semiconductor industry. AOS differentiates itself by integrating its Discrete and IC semiconductor process technology, product design, and advanced packaging know-how to develop high performance power management solutions. AOS’s portfolio of products targets high-volume applications, including but not limited to portable computers, flat panel TVs, LED lighting, smart phones, battery packs, consumer and industrial motor controls and power supplies for TVs, computers, servers and telecommunications equipment.”

Here is a headline from a recent Seeking Alpha article by Beth Kindig:

“Alpha & Omega Semiconductor: Computing Revenue Increases, Eyeing AI PC And Mobile Tie-Ins”

Note 1) This is not a public article but can be found, read, and analyzed only by joining Tech Insider Network.

Here is their latest Quarterly Report Data:

Highlights:

  • Revenue was $150.1 million, a decrease of 9.2% from the prior quarter and an increase of 13.2% from the same quarter last year.

  • GAAP gross margin was 23.7%, down from 26.6% in the prior quarter and up from 23.2% in the same quarter last year.

  • Non-GAAP gross margin was 25.2%, down from 28.0% in the prior quarter and up from 25.1% in the same quarter last year.

  • GAAP operating expenses were $46.1 million, up from $45.1 million in the prior quarter and up from $45.2 million in the same quarter last year.

  • Non-GAAP operating expenses were $38.9 million, up from $37.9 million from last quarter and up from $36.2 million in the same quarter last year.

  • GAAP operating loss was $10.5 million, up from $1.1 million of operating loss in the prior quarter and down from $14.4 million of operating loss in the same quarter last year.

  • Non-GAAP operating loss was $1.1 million as compared to $8.4 million of operating income for the prior quarter and $2.9 million of operating loss for the same quarter last year.

  • GAAP net loss per diluted share was $0.39, compared to $0.10 net loss per share for the prior quarter, and $0.68 net loss per share for the same quarter a year ago.

  • Non-GAAP net loss per share was $0.04 compared to $0.24 net income per share for the prior quarter and 0.21 net loss per share for the same quarter a year ago.

  • Consolidated cash flow provided by operating activities was $28.2 million, as compared to $23.5 million of cash flow used in operating activities in the prior quarter.

  • The Company closed the quarter with $174.4 million of cash and cash equivalents.

CC Transcript Here:

https://seekingalpha.com/article/4690542-alpha-and-omega-semiconductor-limited-aosl-q3-2024-earnings-call-transcript?source=section%3Aearnings_summary|section_asset%3Aearnings_history|first_level_url%3Asymbol|button%3Atranscript

Interesting CEO comments from CC:

Looking at a broader view of the overall semiconductor cycle, inventory corrections across the majority of our end markets are now approaching their conclusion, positioning us for a gradual rebound as we move forward into the rest of calendar year 2024.

As we stated last quarter, we are approaching the recovery phase of the next cycle. While that trajectory is hard to predict, we are coming out of the downturn an even stronger and more resilient company.

Looking beyond 2024 to the growth phase of the next cycle, AOS is transitioning from a component supplier to become a comprehensive solution provider, enabling us to go deeper with increasing BOM content and penetrating new products and verticals.

Guidance:

Now, I would like to discuss June quarter guidance. We expect revenue to be approximately $160 million plus or minus $10 million

Note 2) Guidance suggests no to low growth Y/Y.

Here are a couple of Scouting Reports:

https://seekingalpha.com/article/4704476-alpha-and-omega-semiconductor-what-is-driving-the-rally-higher#source=section%3Asummary|section_asset%3Aall_analysis|first_level_url%3Asymbol|button%3ATitle|lock_status%3ANo|line%3A1

https://seekingalpha.com/article/4684988-alpha-omega-semiconductor-speculative-shot-at-this-level-despite-risk#source=section%3Asummary|section_asset%3Aall_analysis|first_level_url%3Asymbol|button%3ATitle|lock_status%3ANo|line%3A2

From my viewpoint I see no reason to add AOSL to the roster - and - even if I did it would be a small Development Squad position. Having said that - some people that I think exceptionally highly of have established positions in the company. Moreover - since I am a Complete Tech Moron (CTM) I simply don’t see it. To be fair - I also didn’t see it when AOSL was gaining 72% YTD. See how this works?

At $40 or below I might take a small DS position based solely on momentum: as well as, faith and trust in the folks much more tech savvy and smarter than me - which, I admit is a rather large club.

CIG: 357.5

All the Best,
BDH Investing

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