Smart Modular Technologies Inc. Sees Growth Despite Profits Being Down

Strategic Insights -

Smart Modular Technologies Inc. (SMOD) has reported a slight decrease in profits for the third fiscal quarter, despite a significant jump in sales. According to the company's financial report, the third-quarter profit fell by 18% to $4.6 million, or 7 cents per share, compared to the same period last year. However, adjusted earnings, excluding a $5.9 million notes redemption charge, were $10.4 million, or 16 cents per share, surpassing the consensus estimates.

Key Takeaways:

  • Smart Modular Technologies Inc. is a leading manufacturer of PC cards, embedded computers, and memory modules, offering over 500 products to computer, networking, and telecommunications manufacturers.
  • The company's largest customer is Hewlett-Packard, accounting for nearly half of sales, followed by Cisco Systems (18% of sales), Dell, EMC, IBM, Juniper Networks, Motorola, and Xerox.
  • Smart Modular Technologies has a competitive advantage in its fast product turnaround for customers, which helps maintain strong relationships with its clients.
  • Two private equity firms, Francisco Partners and Texas Pacific Group, own approximately 32% each of the company's shares.
  • Despite the small increase in sales, Smart Modular Technologies has a strong market position and a competitive edge in the industry.
  • The company's shares were up 10% despite the decrease in profits, indicating investor confidence in its financial prospects.

Statistics:

  • $4.6 million: the third-quarter profit for Smart Modular Technologies Inc.
  • 18%: the decrease in profits compared to the same period last year
  • 7 cents per share: the third-quarter earnings per share
  • $10.4 million: the adjusted earnings, excluding a $5.9 million notes redemption charge
  • 16 cents per share: the adjusted earnings per share
  • 28%: the increase in sales compared to last year
  • $188.5 million: the total sales for the third quarter
  • 32%: the ownership percentage of Francisco Partners in Smart Modular Technologies
  • 32%: the ownership percentage of Texas Pacific Group in Smart Modular Technologies

Sources:

  • M2 PressWIRE (23 June 2006) - Bellwether Report Takes Notice of Smart Modular Technologies Inc. (Nasdaq:SMOD)
  • BellwetherReport.com (no date provided)