Pity the poor shareholders of Trident Microsystems
On a GAAP basis, Trident did manage to grow revenues this quarter. Revenue grew by 24% from a year ago, reaching $88.2 million -- although its operating expenses really took the growth baton, rising by 31%. As a result, its operating margin fell to 13.6% from 18.6% last year.
For the next quarter (fiscal Q2), Trident is predicting revenue to clock in around $70 million to $72 million. If Trident manages to hit the high end, its year-over-year growth rate will have shrunk to just 5.4% -- not so growthy.
In the conference call, Trident executives were forthright in explaining that the market for televisions is segmenting into high-quality sets, where Trident maintains a strong position, and value-priced sets, where it is seeing significant competition. Unfortunately for Trident, the inexpensive TV that we can buy while grocery shopping is good enough for most of us -- and there are plenty of companies willing to supply the chips.
Competition from companies like Genesis Microchip
These factors were the primary reasons I suggested that Trident was overpriced earlier this year. While the repricing on Friday was certainly painful to anyone who owns the shares, they may be worth a look now.