Cogo Group Inc. (COGO) reported third quarter 2009 earnings per share of 12 cents, matching the Zacks Consensus Estimate. The company posted quarterly revenue of $82.0 million, a year-over-year increase of 9.7%. Industrial applications business generated revenues of $11.1 million, or 13.5% of total revenue, representing a 259.6% year-over-year increase, from industrial solutions targeted at the [...]

(COGO) Cogo Group Matches Consensus Estimates

Cogo Group Inc. (COGO) reported third quarter 2009 earnings per share of 12 cents, matching the Zacks Consensus Estimate. The company posted quarterly revenue of $82.0 million, a year-over-year increase of 9.7%. 

Industrial applications business generated revenues of $11.1 million, or 13.5% of total revenue, representing a 259.6% year-over-year increase, from industrial solutions targeted at the electrical grid and other sectors. Digital media revenue was $49.4 million, or 60.2% of total revenue for end-markets. Telecommunications equipment revenue was $20.3 million, or 24.7% of total revenue, representing a 9.4% decrease year-over-year. The company’s service business contributed $1.3 million in net revenues for the quarter and accounted for approximately 1.6% of total net revenue. 

Gross margin for the quarter increased to 14.4%, compared to 13.8% reported during the third quarter of 2008. The increase in gross profit margin was due to increased revenue in industrial business end-market, which generally had a higher gross margin realization than that of the digital media and telecommunications equipment end-markets. 

Operating income was $2.6 million as compared to $0.1 million for the prior-year quarter. Operating margin for the quarter was 3.2% versus 0.2% for the third quarter of 2008. 

Net income attributable to Cogo Group for the reported quarter was $3.4 million. 

As of Sep 30, 2009, cash was $101.5 million, up $0.5 million from $101.0 million at Jun 30, 2009. Current ratio stands at 4.6 to 1. The company had bank borrowings of $14.0 million. Total equity was $223.1 million as of Sep 30, 2009, an increase of 3.3% from $215.9 million as of Jun 30, 2009. Shareowners’ equity was $221.9 million. 

Cogo Group Inc. is a leading provider of customized module and subsystem design solutions in China. The company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Cogo leverages these relationships and combines their IP to create designs that Cogo then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Cogo focuses on mobile handsets, telecommunications equipment, digital media and industrial applications end-markets for their customized design modules. Major competitors are Arrow Electronics Inc. (ARW), Avnet Inc. (AVT) and Oclaro Inc. (OCLR).
Read the full analyst report on "COGO"
Read the full analyst report on "ARW"
Read the full analyst report on "OCLR"
Read the full analyst report on "AVT"
Zacks Investment Research

Robert Hsu, editor of China Strategy, says a small provider of handsets and wireless infrastructure will help millions of Chinese peasants get connected.

Early in April after a month long run off the bottom I posted a list of equities that gained at least 60% in the preceding 4 weeks (Apr 5: The Meek Shall Inherit the Earth: 92 Stocks Over $10 Returning 60%+) The list was a whose who of beaten down merchandise. Generally, by week 4-5 of an oversold rally these type of names begin to peter out but the ramp has been relentless in lower quality, low price stocks. My gut tells me quant (and other varieties) of hedge funds have been shorting these names, using fundamental reasons - expecting some pullback after huge runs - only to be run over again and again even in week 6 and 7 of this rally. All it takes nowadays is saying "business has stabilized at the worst levels we've seen in decades" to elicit glee and massive short covering rallies. While the market was flattish last week, I[More...]

Today’s tickers: AA, RIO, TGT, HD, IP, VIX, ORCL, COGO & FRED

AA Alcoa Inc. – The producer of aluminum has dropped more than 9% to $5.55 after the company slashed its dividend by 3 cents in an effort to cut back on capital spending. AA hopes these measures will help strengthen its position in the case of a lengthy economic downturn. Most of the action in options-land occurred on the put side as investors seek to profit from declines in the share price. Fresh buying was observed at the March 5.0 strike price where around 25,000 puts were picked up for an average of 15 cents apiece out of the 47,000 puts traded at the strike. Shares of Alcoa would need to fall another 12% by Friday in order to reach the breakeven price of $4.85 – the price at which put-buyers begin to amass profits. Similar purchases were observed at the 5.0 strike in April where some 53,000 puts changed hands throughout the day at an average premium of 52 cents per contract. Interestingly, one investor was seen looking for recovery in the October contract by purchasing 4,000 calls at the 7.5 strike for 1.10 each. We believe this transaction was funded by the sale of 8,000 calls at the April 7.5 strike price for a premium of 23 cents each. This investor does not see Alcoa rebounding in the next 30 days, but he is optimistic that shares will increase by about 35% in order for the calls to land in-the-money by expiration in October. In stark contrast to the optimism seen in the previous trade, one investor picked up 12,000 puts at the 2.5 strike price in January 2010 at a cost of 50 cents per contract. This trade predicts nothing but doom-and-gloom for Alcoa all the way through to the start of next year.

RIO Companhia Vale do Rio Doce ADS – Shares of the metals and mining company have rallied 2% to $13.73 perhaps due to the selection of a new chairman-designate who stated that his immediate focus would be centered on finalizing the transaction with Chinalco (Aluminum Corp. of China). Global economic conditions continue to thrash commodity markets and Rio Tinto sees little chance of a rebound this year. Thus, the new chairman (Jan du Plessis) is hoping that finalized deal – which would increase Chinalco’s stake in RIO to 18% – will provide RIO with a…