Technology is the Place to Be
Thursday, October 26th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential
When it comes to technology companies, there are all sorts that I really like right now. Some are pure play software companies, while others deal more with telecommunications and network communications.
One company that stands out as a real winner is Techwell Inc. (NASDAQ/TWLL). This company recently listed on the NASDAQ.
Techwell is a semiconductor design company that sells mixed signal integrated circuits for video applications in the consumer, security surveillance, and automotive markets.
The company’s expertise specifically deals with semiconductors that enable the conversion of analog video signals to digital form. The company is based in San Jose, California, and boasts approximately 80 employees in the U.S., Korea, Taiwan, China, and Japan.
Just imagine all the technology out in the marketplace that currently works on analog video signals. Techwell’s business is booming, selling everything from LCD TV processors to rear vision systems for automobiles to digital video recorder technology.
Still very much a small-cap company, Techwell generated solid growth in its second quarter of 2006. According to the company, its revenues for the second quarter grew 32% to $12.8 million, up from revenues of $9.7 million in the second quarter of 2005.
The company generated revenues of $5.7 million from its security surveillance products, $1.3 million from LCD display products, $5.4 million from video decoder products, and $356,000 in other revenues.
Gross margin grew in the latest quarter to 59%, up from gross margin of 54% in the preceding quarter, and 56% in the comparable quarter in 2005.
Net income for the second quarter of 2006 grew to $2.9 million, or $0.15 per diluted share, as compared to net income of $2.2 million, or $0.12 per diluted share, generated in the second quarter of 2005.
The company finished the quarter with cash and short-term investments of $44.2 million.
There’s no other sector of the stock market that I’d rather be focused on. Technology is clearly the place to be as the commodity and resource boom winds down.
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.



