Anyone reading Apple's
Synaptics' latest financial results, released last week, caught Wall Street's attention. The stock price jumped nearly 22% last Friday following a blowout quarter driven in large part by demand for the iPod. Net revenue for the second quarter of fiscal 2005 rose 65% to $56.5 million. The company earned $9.7 million, or $0.33 per share, in its second quarter. That equates to a whopping 178% increase from the $3.5 million, or $0.13 per share, pocketed a year earlier.
The profit surge reflected robust demand for portable digital music players and higher quarterly sales of non-PC products. The phenomenal growth of Apple's iPod played a substantial role, but other digital music player manufacturers -- such as Creative Technology
Those numbers are impressive, but now the question is what have you done for me lately? Simply put, it's all about the forward guidance, and the CEO of Synaptics said that the company is entering the third quarter with a strong backlog of about $35 million. Revenues are expected to be flat, but continued strength in the digital music player market should offset any declines in notebook component sales. The estimates for fiscal 2006 show that the growth in earnings is forecast to be about 23%. At $36, Synaptics trades at a forward price-to-earnings ratio of 26, not expensive compared with other tech stocks.
While the popularity of MP3 players has definitely sweetened Synaptics' results, the company is making inroads into the cell-phone market. Handset manufacturers such as Nokia
Fool contributor Kelvin Taylor does not own shares of any of the companies mentioned.