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Did SMIC hit bottom?

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question_3 August 12, 2011 (Chinavestor) SMIC (NYSE:SMI), the largest Chinese semi manufacturer, reported second quarter earnings that disappointed investors. Revenues fell 4.9% for the quarter to $352.4 million QoQ and 5.9% YoY. Gross margins were pressured due to low demand for wafer starts. The company slid to a net loss if $3.8 million from a net income of $10.2 million a quarter ago. Net loss translated to an EPS of $(0.0066) per ADS.

Shares of SMIC (NYSE:SMI) are under pressure following a weak outlook. The Company expects revenues for the third quarter to fall -14%-17% with gross margins falling next to zero percent. This combination is a sure recipe for another net loss!

SMI_2011Q2_revearnings

SMIC's historical revenue and earnings growth chart is far from impressive. Considering the lack of revenue growth going forward, current stock price looks justified for the next 3 months. But value investors may wan to build entry positions into this stock at $2.30 for the long haul.



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