The share price of QuickLogic Corporation (NASDAQ :QUIK), the fabless semiconductor company, jumped on June 23, 2017. It was put out that Qiwo Smartlink Technology Company, Ltd. had selected the company’s EOS™ S3 multi-core voice enabled System on a Chip (SoC) for its new Bluetooth headsets. The new contract seems to bring a lot of revenues for QUIK, as the share price increased as much as 40% in only two days.
The company was founded in 1988 and moved to Delaware in 1999. It develops low power System on Chip, or SoCs, Field Programmable Gate Arrays, or FPGAs and embedded FPGA intellectual property. What’s the company’s competitive advantage? According to the annual report, these products are used by smartphone designers and other IoT original equipment manufacturers to “offer highly differentiated, immersive user experiences and long battery life for their customers“.
Hence, the most relevant thing to look at here is the research and development activities. We could learn that the company employed 76 people worldwide as of January 31, 2017. 39 employees located in California and India work for the R&D department. QUIK holds thirty active U.S. patents and has five pending applications for additional U.S. patents. The issued patents are going to expire between 2018 and 2034.
Let’s talk about the news that excited the market. Qiwo’s headsets that will contain the technology provided by QUIK are expected to be produced later this year. According to the press release, the new headsets “represent a new class of voice enabled smart hearable devices that leverage always-on trigger word recognition and voice control.” Qiwo is able to offer such features thanks to the integration of hardware provided by Sensory, Inc., Low Power Sound Detection (LPSD) technology, and the QuickLogic EOS S3 platform. The company’s client is a joint venture founded by Qihoo 360 Technology Company, Ltd., a large Chinese company. Having such a big partner brings a lot of confidence to the market. Brian Faith, QuickLogic’s president and CEO, explained that the know-how of QuickLogic was necessary for delivering lower power consumption:
“Our close working relationship with Qiwo furthers our strategic initiative to bring the immersive voice enabled experience to all things mobile and connect them to any cloud-based AI digital assistant,Voice enabled smart hearable devices present multiple design challenges, including optimizing for size and the lowest possible power consumption. Qiwo answered these challenges by selecting our EOS S3 multi-core SoC, which delivers substantially lower power consumption for always-on voice enabled applications than any other MCU-based solution in the market today.” Source
Fengko Gao, CEO of Qiwo, marked the same about the EOS S3 multi-core SoC, and also added that the company may incorporate the solution for other developments.
“The QuickLogic EOS S3 SoC provided us the lowest possible power consumption for new voice enabled headsets. With its multi-core design, integrated voice technology and inherent flexibility to address multiple use cases, we look forward to incorporating the EOS S3 solution in future wearable and IoT designs.” Source
Furthermore, the same day the company put out that it is collaborating with AISpeech, an Artificial Intelligence (AI) speech technology company operating in the Chinese market. Qiwo and QuickLogic will work together with AISpeech. Brian Faith, QuickLogic’s president and CEO, said the following about the move:
“Our unique implementation of Sensory, Inc. voice technology, and our ability to include multiple voice trigger words in a single design, places us on the forefront of this trend. Our collaboration with companies, such as AISpeech, reflects our commitment to establishing a strong global ecosystem of partners.” Source
On June 23, 2017, another company noted that it will be using the technology produced by QUIK. It is Janyun, a cloud-based applications company, using the wearable and IoT products that will be using the EOS™ S3 Sensor Processing Platform. Saicheng Tang, CEO of Janyun, explained the decision remarking the low power consumption as the other clients did:
“The EOS S3 platform provides us with a single chip, multi-core solution that optimizes our designs for cost, ultra-low power consumption, and design flexibility that enables us to support multiple end customer use cases with a single platform. We view these capabilities as essential to our success in the development of our ODM business model.” Source
Financial situation – Is the company undervalued and why?
The following financial figures will help investors understand the size and potential of QUIK:
- Market Cap: $115 million
- Total debt: $6.1 million
- Revenue per share: 0.17
- Cash per share: $0.34
- Book value per share: $0.30
- Share price: $1.46
The fabless semiconductor industry has been quite undervalued in the last two years and many companies reacted by restructuring. We could confirm in the annual report that the company has already done it in the past, which market participant may appreciate. In our opinion, the share price may jump once the revenues from the new contracts signed are released.
Another fact that may be making the market push down the share price is that the company operates in China, and has Chinese partners. We believe that market participants should not fear in this case. The fact that big partner Qiwo is collaborating with the company is a key factor. Such a big company working with QuickLogic is a big positive.
|Holder||Shares||Date Reported||% Out||Value|
|Frontier Capital Management Company LLC||6,825,273||Mar 30, 2017||8.58%||13,377,535|
|Vanguard Group, Inc. (The)||3,383,138||Mar 30, 2017||4.25%||6,630,950|
|Blackrock Inc.||1,575,373||Mar 30, 2017||1.98%||3,087,731|
|Essex Investment Management Co Inc||612,989||Mar 30, 2017||0.77%||1,201,458|
|Firsthand Capital Management, Inc.||520,000||Mar 30, 2017||0.65%||1,019,200|
|Geode Capital Management, LLC||481,484||Mar 30, 2017||0.61%||943,708|
The share price of QuickLogic jumped more than 40% return in a few days. The reason was that the company announced collaborations with three new companies. The market celebrated the news as revenue expectations increased quite a bit. We checked the book value per share and the company does seem to be slightly undervalued while having cash on hand and little debt. Additionally, the company is restructuring, thus the business may be more flexible and profitable in a few years. Finally, we saw that some market participants disclosed big stakes in the company. To sum up, try to check the next company news; some investors are making money here by reacting fast to the announcements.
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Disclosure: We have no position in QUIK and have not been compensated for this article.