Hi Saul,

Not sure if I’ve said this already but thanks so much for starting this board. It’s really great to hear your perspective on your stocks.

Did you keep any notes on SYNA? You may have posted them already in one of the previous posts??


Did you keep any notes on SYNA? You may have posted them already in one of the previous posts??


I have a feeling I’ve already posted them but there doesn’t seem to be a search feature to go through the whole board to find it, so here are my notes again. Warning: Long.


Synaptics SYNA

Touch screen technology

May 2013 Rec by Reitmeister

Why Buy Synaptics?: These guys are a red hot supplier of touch screen technology to the electronics industry with strength in smart phones (especially Android phones like the Samsung Galaxy) and also in many tablet devices.

They have enjoyed an average earnings surprise of +40% the last 4 quarters including a 53% beat this past go around with estimates moving from $1.20 for the current year up to $1.95. And next year went from $1.39 to $2.66. Yes, those are massive estimate revisions leading to an obvious Zacks Rank #1 designation.

Shares recently got as high as $45.40. So I like getting in on this pullback to $41 and change. Even better the average target on these shares stands at $51.50 with the street high at $60.

Altogether we have a hot technology growth play with explosive estimates and cheap valuation. Need I say more???

Mar Quarter Results
Revenue of $163.3 million, up 24% from $131.7 million.
Adj Net Income of $27.0 million, or 79 cents per share, up from $17.9 million, or 51 cents per share.

We are extremely pleased to report record revenue during the third quarter. The continued adoption of our solutions by a broad base of key customers is a testament to the strength of our technology leadership and has enabled us to diversify our business through increased penetration of the rapidly growing mobile touchscreen market. As the market leader in touch solutions, we believe Synaptics is well-positioned to drive long-term, profitable growth.

Third Quarter 2013 Business Metrics
Revenue mix from mobile products was approximately 64%, while PC products made up 36%.

Revenue from mobile products was up 57.2% to $104.7 million. Mobile products revenue includes all touchscreen and video display products.

Revenue from PC products was down $58.6 million.

Gross margin was 49.6%, up from 47.2%

Cash at March 31, was $315.5 million. No Debt.
Cash flow from operations for the quarter was $24.7 million.
Outlook: Considering our backlog of approximately $124.0 million, customer forecasts, and the resulting expected product mix, we anticipate revenue to be in the range of $190.0 million to $205.0 million for the June quarter, an increase of 38% to 49% on a year-over-year basis. Our strong June quarter backlog and outlook reflects a steep ramp of new designs across multiple mobile customers.

June 2013 – Zacks Bull of the Day
How interested would you be in a technology growth company making touch sensor “hover” technology for Samsung phones and dozens of other devices that is trading under 15X next year’s estimates? The stock is down over 15% since an early June report that the Korean handset maker was seeing a slowdown in sales of its Galaxy S4 unit. But that’s not the whole story.

Synaptics is a leading developer of human interface solutions for a wide variety of mobile computing and communications devices and is the leading supplier of TouchPads to the notebook computer market.

Products include the TouchPad input device, TouchStyk pointing stick, Dual Pointing combination input solution, ClearPad touch screen, Spiral pen input solution and QuickStroke Chinese handwriting software.

How interested would you be in a technology growth company making touch sensor “hover” technology for Samsung phones and dozens of other devices that is trading under 15X next year’s estimates? The stock is down over 15% since an early June report that the Korean handset maker was seeing a slowdown in sales of its Galaxy S4 unit. But that’s not the whole story.

Putting the Galaxy S4 in Perspective
Investors need to consider several things when evaluating Synaptics as a buy or a sell. First, Samsung accounts for an estimated 20-30% of overall sales for the company and the Galaxy S4 program, specifically, is only 10% of that.

Second, what is the true extent of the S4 slowdown? The biggest concern was slowing sales to Europe. But from all the analyst reports I’ve read, it looks like those fears were overblown. The worst downgrade to sale estimates came from the analysts at Needham last week when they lowered their forecast from 100 million units to 80 million for 2013.

While Needham analysts recently lowered their revenue and earnings estimates and their price target from $58 to $54, they reiterated their “Buy” rating as they felt that the market was giving the company little credit for winning the design placement in the S4, which was only confirmed in late April when the shares were trading $42.

“We believe SYNA has several design programs in the (second-half of) 2013, both on the tablet and handset side, that could provide upside to our reduced numbers, namely: Samsung Note III, Amazon Kindle tablets, Samsung lower end S4 variations (i.e. S4 Active and Mini) and higher sell-through on existing smartphone platforms.”

Meanwhile, JPMorgan analysts have remained consistently positive on Synaptics and recently raised their revenue and earnings estimates, their rating (Over-Weight), and price target for the shares, from $44 to $52. They note the design wins beyond Samsung with HTC, Blackberry, Sony, Lenovo, and LG.

As Synaptics has invented better high-tech solutions for its PC and mobile OEM customers, profit margins have been in a strong up trend. From March of 2011 to March of this year, gross quarterly profit margin has grown from 40.46% to 49.65%.

June 2013 – Company raises estimates!!!
Raised outlook for the June quarter. Now expects to report net revenue in the range of $227 million to $230 million, an increase of approximately 66% year-over-year and 40% sequentially.

The expected net revenue range exceeds the high end of the previously provided outlook of $190 million to $205 million. Gross margin for the fourth quarter of fiscal 2013 is expected to be approximately 50%.

The Company’s updated outlook is being driven by higher than expected revenue from mobile products, reflecting strong demand from a broad range of leading-edge designs across multiple mobile customers.

Aug 2013 – announced Jun quarter results

Revenue of $230 million, up 67% from $138 million. This is huge!

Adj Net Income of $49 million, or $1.39 per share, hugely up (up 157%) from 54 cents per share.

Business Highlights
Revenue mix from mobile products was approximately 75%, while PC products made up 25%.

Revenue from mobile products was up 186% to $173 million. Mobile products revenue includes all touchscreen and video display products.

Revenue from PC products was down $57 million.

Gross margin was 50.0%, up from 46.1%!!!

Cash at March 31, was $355.5 million (up $40 million sequentially in spite of stock buybacks). No Debt.

Cash flow from operations for the year was $102 million. They used $46 million to repurchase 1.6 million shares. They repurchased about 5% of total shares in 2013. They are authorized for $160 million more in stock repurchases.

Outlook: Our performance in the June quarter reflected a steep initial ramp of new designs across multiple mobile customers. Considering our backlog of approximately $96 million entering the typically back-end loaded September quarter and customer forecasts, we anticipate revenue to be in the range of $210 million to $225 million for the first fiscal quarter, up 65% to 77% on a year-over-year basis. We expect the revenue mix from mobile and PC products to be similar to the preceding quarter. We expect adj earnings to be $1.15 to $1.30 (that’s up from 37 cents).

From the CC - Our leading share and increasing revenue percent from mobile products has made forecasting more difficult. This is due to the significant volumes, quick ramp up, and relatively short product life cycle of these devices. However, given the technology advantages that we have, we believe we continue to have a very long runway ahead of us in mobile.

As we look ahead to fiscal 2014, the decline in PC market will continue to impact our overall growth rate. However, overall we feel confident we’re going to achieve another year of very strong, annual topline growth at a level that is similar to our growth rate we just had in fiscal ‘13.

They have more market share than the next 3 or 4 competitiors put together.

Our smartphone business is now a big business, so growth obviously is going to slow to a certain degree. So the tablet growth will be at a faster pace than our smartphone growth, but it’s only 5% of total revenue right now.

Conclusion: Wow! Great results! Great outlook! And selling at just 13 times trailing earnings! On the other hand, this is a very fluid market where things could change rapidly as far as competition, and Samsung is apparently very fickle. They also have most of the mobile phone market already, so to grow it’s China, or low end smart phones, or tablets. And prices of their chips keep coming down. Their only moat is their better technology (which can change). I have a big position already, so Hold, or buy just a little if I get a good price.

Aug 2013 – Bull of the Day by Kevin Cook
What’s the most appealing feature of our smartphones, besides their ability to keep us connected and informed? Arguably it is the touchscreen which allows us to glide effortlessly through our favorite forms of communication, information, and entertainment.

Synaptics is one of the key developers of touchscreen technology with Samsung smartphones as a primary customer. As Samsung phone sales grow in Asia and the US with each rollout of new devices, Synaptics looks to benefit.

And recent uncertainty about whether SYNA would face new competition in this role has settled on the idea that they will be the top supplier even though Samsung may always have to contract with multiple technology vendors. Plus, there is now speculation that SNYA technology will be featured in the latest Samsung tablets and notebooks due this fall.

I last wrote about SYNA in June, the day before the company raised guidance and rose over 15% the next day. This week, SYNA has returned to the top 5% of companies which have the highest earnings momentum.

The PC is Dead, Long Live the Touch PC
5 years ago, Synaptics derived 3/4 of its revenue from desktop products. Today, smartphone technology dominates sales. But the company is still evolving with the PC industry to meet the demands of devices where consumers want better interaction.

As a leading developer of human interface solutions which enhance the user experience, Synaptics provides the broadest touch solutions portfolio in the industry. The ClearPad family supports touchscreen solutions for devices ranging from entry-level mobile phones to flagship premium smartphones, tablets and notebook PCs.

The TouchPad family, including ClickPad and ForcePad, is integrated into the majority of today’s notebook PCs.

Synaptics’ wide portfolio also includes ThinTouch supporting thin and light keyboard solutions, as well as key technologies for next generation touch-enabled video and display applications.

“Capacitive touch has become the defacto human interface for today’s small form factor computing devices like smartphones and tablets, but has seen slower integration in larger computing devices due to design challenges and high costs. With the introduction of the game changing ClearPad S7500, barriers are broken down, making it simple and cost-effective for OEMs to embrace the large touchscreen for a range of new computing devices and form factors.”

On a Path to New Highs
Synaptics surged to record revenues of $230 million in the recent quarter. And while the stock is threatening a sustained breakout above its double-top highs of 2007 and 2009 at around $41, it is trading below its 5-year average valuation of multiple of roughly 14 times.

Investors appear to be waiting for the next product releases from Samsung to make their move. But the estimates say that now is the time to jump on board with three major technology analysts bumping their 6-12 month price targets to between $54 and $57.

That is potentially over 35% upside from Monday’s close of $40.25. Short-term traders may see good opportunity here if they can accept a risk-reward ratio of 1-to-1 (stock falls to $35) and they seek to gain less than half of that 35%, looking for a test of this year’s high above $45. Then again, if we get a breakout above $45, I’d hang on for a lot more.

Disclosure: I own shares of SYNA for the Zacks Follow The Money portfolio, which tracks institutional buying in growth stocks with strong earnings momentum.

Oct 2013 - Acquisition
Acquiring Validity Sensors, a leading provider of biometric fingerprint authentication solutions for smartphones, tablets and notebook PCs. With the acquisition of Validity, Synaptics expects to gain access to the fast growing biometrics market, significantly expanding its market opportunity and underscoring the company’s commitment to making smart devices easier to use.

Biometrics and fingerprint sensing is poised for explosive growth. Synaptics believes the acquisition of Validity positions the company at the forefront of this exponential growth opportunity and allows the company to strengthen its portfolio of touch-based technologies with the diversification into fingerprint-sensing capabilities.

Oct 2013 – New Customer
Announced that China’s Coolpad smartphone maker Yulong Computer Telecommunication Scientific will be using Synaptics’ touchscreen technology in its phones.

Oct 2013 – Sept quarter results

Revenue growth of 75% over prior year?.

Operating profit up more than 3X over prior year?.

Significant Mobile and Tablet Design Wins.?

Entering Fingerprint ID market with acquisition of Validity Sensors.

Revenue of $222.6 million was a record for a September quarter and up 75% from $127.0 million.

Adj net income was $45.9 million, or $1.31 per diluted share, up frpm $12.7 million, or 37 cents per diluted share.

In addition to posting substantial revenue growth during the fiscal first quarter, we made strong progress on a number of fronts. We saw a growing number of devices deploy our on-cell and in-cell display integrated solutions, continued to gain traction in the China mobile market, and broadened our customer base in large touchscreens through key new design wins in tablets and touch-enabled notebooks. Following a strong first quarter, the first half of the fiscal year is tracking according to plan, and we expect to post top-line growth in excess of 50% over the same period last year."

We recently announced Synaptics’ entry into the fast growing fingerprint ID market through a definitive agreement to acquire Validity. We believe this acquisition reinforces our market leadership in human interface technology while significantly expanding our market opportunity.

First Quarter 2014 Business Metrics

Revenue mix from mobile and PC products was approximately 73% and 27%, respectively.

Revenue from mobile products of $162.7 million was up 152% year-over-year and down 6% sequentially.

Revenue from PC products totaled $59.9 million, a decrease of 4% year-over-year and an increase of 5% sequentially.

Gross margin was 49.1%, up from 47.7%

Cash at September 30 was $331.6 million.
Cash flow from operations for the first quarter was $28.9 million.
The company used $50.0 million to repurchase 1.2 million shares of common stock.

The September quarter benefitted from greater strength in mobile revenue than we anticipated due to the timing of customer channel fill ahead of the holiday season. Considering our backlog of approximately $117.0 million entering the typically front-end loaded December quarter, we anticipate revenue to be in the range of $200 million for the second quarter, an increase of about 40%, year-over-year.

Conference Call – They were very positive, forecasting a similar (50%) rise next year.

Conclusions: In spite of an incredible quarter and forecast, the market focused on their forecast for the next quarter being “only” up 40% in revenue and probably 100% in earnings (which is less than this quarter), so the stock sold off 15% to $45. That brought it down to a PE of about 11x and I couldn’t resist. I bought 2000 additional shares at $45.70, inspite of it being one of my biggest five positions.

Dec 2013 – SYNA announced a major notebook OEM has selected its ForcePad technology to power its latest premium notebook, marking the first global OEM to bring Synaptics’ ForcePad technology to market. ForcePad is the industry’s first TouchPad that incorporates pressure recognition and delivers a new dimension of control for consumers.

Synaptics’ ForcePad is an enhancement beyond ClickPad, replacing the mechanical click mechanisms with more accurate and reliable solid state force sensors. This gives users more intuitive and precise interactions in both operating system controls and applications including multi-touch gestures. Additionally, by incorporating variable pressure detection across the entire touch area, ForcePad enables leading OEMs to utilize 100 percent of the touch area for pointing, gestures and button activation, ultimately allowing for increasingly thin notebook designs when compared to previous ClickPads.

Synaptics’ ForcePad also incorporates TypeGuard software technology. Many notebook users become frustrated when they falsely move the cursor or accidentally activate a tap by touching or brushing the touchpad with their palm. TypeGuard virtually eliminates all false cursor movements, accidental taps and false edge scrolls.

Jan 2014 - Reported Dec quarter results

Revenue was $205.8 million, up 44% from $143.0 million.

Adj Net Income was $31.1 million, up 76% from $17.7 million.

Adj Earnings were 86 cents, up 62% from 53 cents.

(Adj Earnings would have been 95 cents if not for the increased headcount and loss from the fingerprint acquisition, which they expect to be accretive as early as the June quarter)

“Excluding the impact of the acquisition of Validity, which closed in early November, our financial performance for the December quarter was above the mid-point of our guidance as we experienced strong year-over-year revenue growth in touchscreen and touchpad products. As we enter the second half of fiscal 2014, we expect to benefit from continued strong organic growth, further augmented by growing contributions from our acquisitions and new product innovations. In addition, we are very excited with the progress of our new Fingerprint ID business and expect the acquisition to be accretive by the end of the fiscal year, earlier than previously anticipated.”

Second Quarter 2014 Business Metrics

Revenue mix from mobile and PC products was approximately 65% and 35%, respectively. Fingerprint ID products have been classified according to type of device.

Revenue from mobile products of $133.6 million was up 64% year-over-year. Mobile products revenue includes all touchscreen, video display, and applicable fingerprint ID products.

Revenue from PC products was $72.2 million, up 17%.
Gross Margin was 47%, down sequentially from 49% due to the acquisitions
Cash at December 31st was $369 million.

In the first six months of fiscal 2014, cash flow from operations was $86 million, which means $57 million in the quarter, and the company used $70.3 million to repurchase of approximately 1.7 million shares in the 6 months, of which 0.5 million were bought in the quarter.

Outlook: Considering our backlog, customer forecasts, and the resulting expected product mix, we anticipate revenue to be in the range of $180 million to $200 million for the March quarter. The March quarter outlook reflects seasonality, with incremental revenue from our new Fingerprint ID products.

A great quote from the Conference Call:

Richard Bergman - President and CEO
“Well, Rob, as I said the top priority is for us is still growth. And as long as we see some great opportunities out there in the markets, in the businesses that we have, we’re going to continue to invest ahead of that curve. So both on the touch controller side as well as the fingerprint side, we see robust opportunities. So we’re investing in both of those businesses.

I will say in the fingerprint side, we’re having a tough time dealing with all the opportunities, so we’re trying to add as many people as quickly as we can over the next couple of quarters, but at the same time, we never comprise. We want the best people in the industry.

I think one of the things that gets a kind of little bit ignored about Synaptics is what we’ve done in terms of investment and R&D. We have kept that at nice, healthy percentages, so we can have that growth. But we do a really good job managing the SG&A side of things as well. It’s about 10% of our revenue. And in that way we kind of manage the overall OpEx, so more of that translates to the bottomline”.


Thank you Saul! Great stuff. I really like the fingerprint ID on my iPhone. So much more convenient and secure than a passcode. The Android mobile vendors will need this feature and therefore I think that SYNA will do well in keeping business going forward.

Thanks for the nudge concerning SYNA over on the RB boards. I read the conference call transcript over on SA, and went ahead and opened a small position just to be sure I continue to pay attention. Plan to add on small market dips.
The line I liked from the call concerned the growth of fingerprint protected devices from 30 million in 2013 to 500 million in 2016 (not including Apple!). According to an IHS article I read, Apple has developed the fingerprint technology in house (starting with an acquisition, I think).
Thanks again,

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You’re welcome Doug. I like SYNA and it’s one of my big positions that I recently added a little to. I know that I wrote about it here (post #426) but I didn’t remember writing about it on the RB boards recently. (That’s what happens when you get old).


I bought a starter position today after reading through the conference calls from the last two years. They claim that their Gross profits will be up 2% this year in a range from 47% to 49%. I should have my page post done by this weekend.


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Thanks so much Andy for following through on SYNA. I look forward to your page post.


Awesome notes Saul thanks for sharing, I had never heard of SYNA before.

Hey Andy, where are you posting your page posts?

Hey ColdDay,
I have only started looking at SYNA and my first page post was right here on Saul’s board.