StreetInsider: SPRD GROWTH...

[MaxKolbe]

Canaccord Genuity Morning Coffee on Spreadtrum (Nasdaq: SPRD): Spread
the word.

Spreadtrum reported Q4/11 sales of $192 million and EPS of $0.78,
generally in line with guidance and Canaccord Genuity Technology
Analyst Michael Walkley’s $191 million/$0.82 estimates. Consistent
with his checks, sales were driven by strong TD-SCDMA unit growth as
the migration from 2G to 3G handsets in China picks up pace,
offsetting weakness in 2/2.5G sales to both India and China. However,
with management changes at China Mobile causing a disruption to H1/12
growth prospects, Spreadtrum guided to Q1/12 sales of $158-163 million
and gross margin of 38.0%, or below Walkley’s $165 million/40.5%
estimates. Spreadtrum management estimates its TD-SCDMA market share
is now roughly 57%, and management anticipates the TD-SCDMA market
should grow from roughly 50 million units in 2011 to 80-90 million in
2012. Given its dominant share in TD-SCDMA feature phones and new TD
smartphone products launching this quarter, Walkley expects Spreadtrum
to maintain 50%+ share during 2012. In 2013, he expects significant TD-
SCDMA market growth to drive unit growth for Spreadtrum, though he
does expect its share to drop below 50% with new entrants including
Qualcomm (Nasdaq: QCOM) in devices such as iPhone 5. Due to his lower
unit assumptions, Walkley has reduced his 2012 EPS estimate from $2.89
to $2.00 and is introducing his 2013 estimate of $2.40.

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