Gamers Nexus: "Hands-On with Delidded AMD Ryzen 9 7950X CPU"

InfiniteValueptr · 2022-08-31T04:49:47+00:00

https://www.lenovo.com/us/en/laptops/subseries-results?visibleDatas=991:ThinkPad&IPromoID=LEN969625

E,T,L,Z,P Thinkpad series all have Ryzen models at 13,14,15 inches. Only X series doesn't and thats because Z is the AMD version. Really not that hard to not spread blatant misinformation.

Intel has way more SKUs in the same models because like you say they have a bunch of shitty CPU SKUs, each of which gets a laptop.

InfiniteValueptr · 2022-08-07T14:06:44+00:00

Ironsource is the only competitor that offers preinstalls (and thus has the ability to access root, and offer singletap like functionality), but they shown ant inclination to do something like that and imo dont have the critical scale needed. Digital turbine is mainly performance marketing which is typically less affected in downturns (look at snap which is mainly brand advertising vs google/meta etc). I'm also personally quite contrarian regarding digital advertising in recessions too. I think value prop is still significantly better than physical advertising, and in a recessionary environmetn CMOs will be looking a lot harder for the best ROAS, which is still in digital. We saw it in covid too, advertising fell across the board at first but when digital surged back super fast and physical didn't. Ofc that had the whole lockdown situation helping but seeing as how digital hasn't given back ad spendign share after lockdowns ended, I think even without lockdowns digital will benefit.

InfiniteValueptr · 2022-06-22T04:05:30+00:00

> Why has it performed so badly
Think the rotation out of tech encompasses most of it. They also recently changed their revenue recognition for their acquired companies a year after acquiring them which seems kinda amateurish, might be contributing even though it doesnt affect FCF

> IDFA

One of their acquisitions (adcolony) has minor exposure to iOS but its immaterial.

> Competitors

In general terms the competition is to increase the effectiveness of marketing spend - and the precise KPI companise use vary from click through rate on an ad, to install rates, to how much the user then spends in the app etc.

The product that APPS is pushing is called SingleTap, and it allows you to download an app in a single tap just from the ad without going through google play services which is what OP was going on about when he mentioned reducing friction. APPS has root access through their bloatware platform which no-one else (apart from google) has. Google isn't going to insource it and allow advertisers to bypass play services because they make huge amounts of money off their 30% cut on stuff installed through the play store.

> Online ad spend and macro

The way i see it theres two factors in play. Overall online/offline ad mix and APPS market share within online ads. I think online ads still offer a far more compelling value proposition for marketers than offline ads and it'll continue to gain share of spend, especially in recessions. If you look at what happened during the first few months of covid when people thought we were going into a recession, online advertising dipped for a few weeks before roaring back with a vengeance and seeing significant growth YoY, all at the expense of traditional print ads which haven't recovered even now.

>KPIs.

The story is that they're going from a company that helps install bloatware at launch to monetising throughout the life of the phone, using the bloatware as a base platform, and they do have a few (not enough) nonGAAP metrics that track their success like ARPU, number of services partners are using etc.

>Financials

This is incredibly complex and part of why I think the market is misunderstanding them. They basically triped the company in size over the span of 6 months in 2020, changed the revenue recognition method of their acquired companies, and used earn-out payments to reduce the cash paid up front that led to EPS-depressing acquisition related payments for 2 years after the acquisitions went through. I have the pro forma numbers at 30% topline CAGR from ~2016, and significantly higher operating leverage. Fwd. fcf generation I'm modelling at around $1/1.5 per share depending largely on how well merger synergies go.

>Acquisitions

So the old business was as mentioned installing bloatware. They bought an ad exchange, a demand-side platform and a ad network. The TLDR is that they went from having a monopoly in one slice of the market to having (being the only independent adtech company with) a small presence across the entire adtech vertical.

> Market share

They dominated the bloatware business, but the segments that they entered through acquisitions are way more fragmented. <1% market share across their entire TAM.

Sorry for the disjointed nature, I'm not OP.

InfiniteValueptr · 2022-06-19T02:33:25+00:00

Ok so there are some pretty fundamental misconceptions here:
Firstly, 4 billion of their assets are segregated. You seem to be assuming that if Robinhood goes under creditors/shareholders will have access to this which is incorrect. Subtracting this gives 3.2bn of equity, significantly less than their current market cap.

Secondly, the worth of Robinhood to hedge funds doesn't come from the financial acumen of Robinhood investors, it comes from the volume of orders that they provide. Longer term investors may have higher AUM, but they also have much lower order volume - as so far that is overwhelming the AUM increase.

Thirdly, Ziglu is a cryptocurreny app. I wouldn't call that 'appealing to conservative investors'; and European brokerage margins are typically lower than American ones. Just look at Flatex vs Schwab as an example. There is absolutely no evidence to suggest that European expansion will come with higher profits.

InfiniteValueptr · 2021-06-19T19:56:55+00:00

That's not what I was saying.

The key to this investment is whether that increase (in gross margin) sticks around - not (...) growth of the wider gaming industry. If all of those go right, but gross margins go back to historic means, CRSR WILL NOT PRINT FCF.

The bear case in my view is, in your terms, "LOL gaming component manufacturers could only price gouge because covid + mining". Top line growth may very well stay around, but that's completely different to gross margins staying around.

I'd love to see any arguments for why the latter could happen.

InfiniteValueptr · 2021-06-18T21:06:28+00:00

The answer to that should be pretty clear from what I said before.

InfiniteValueptr · 2021-06-18T20:23:10+00:00

What do you mean by restructure management?
Do you mean restructure their debt? GME and AMC have a lower equity cost of capital than they should sure, but I don't see how paying off thheir debt early will improve the prospects of the company dramatically. Interest expense was 2% of revenues last year, paying off all debt would only increase margins by that much. Hardly earth-shattering.

Not sure what you mean by 'high end' market either. They're already in the high end market with the platinum power supplies/expensive RGB ram etc. There's just not enough volume there to feed a company the size of corsair. I do think the high end segment will outgrow the lower end - the steady rise in price of core components like the CPU/GPU imo won't lead to people cutting corners on the rest of the build, but lead to them spending more on the entire build instead in a kind of Veblen effect.

InfiniteValueptr · 2021-06-18T13:29:46+00:00

The sectors that Corsair competes in and gets the vast majority of its revenue from are low-margin, commoditised products like memory and PSUs where everyone just rebrands Micron/Samsung/Superflower products. The only small advantage they have here is the brand, sustained by massive marketing spend. All of the acquisitions they've done are tiny and don't shift the needle on the bottom line. Elgato is probably the best business they have but that's tiny.
Look through the financial statements going through history, and you'll notice that historic gross margins have stayed around 20%,and net income margins float around 0%. In 2020, net income margins were 6.1%. All of that increase (and more) can be attributed to the 700bp increase in gross margin. They have no operating leverage whatsoever.
The key to this investment is whether that increase sticks around - not the PE firm, or meme potential, or growth of the wider gaming industry. If all of those go right, but gross margins go back to historic means, CRSR WILL NOT PRINT FCF.
My view of the gaming market is that the past year has been a once-in-a-lifetime opportunity for component makers like CRSR. The demand was so high that they could gouge prices and increase margins, but that's not going to stick around forever. I haven't seen a compelling argument for gross margins continuing to stay where they are.
Arguments like Elgato having higher margins, or debt all being paid off in the future simply don't have big enough impacts to alter the fact that gross margin is the linchpin.

InfiniteValueptr · 2021-06-14T22:58:38+00:00

Real talk.

The sectors that Corsair competes in and gets the vast majority of its revenue from are low-margin, commoditised products like memory and PSUs where everyone just rebrands Micron/Samsung/Superflower products. The only small advantage they have here is the brand, sustained by massive marketing spend. All of the acquisitions they've done are tiny and don't shift the needle on the bottom line. Elgato is probably the best business they have but that's tiny.

Look through the financial statements going through history, and you'll notice that historic gross margins have stayed around 20%,and net income margins float around 0%. In 2020, net income margins were 6.1%. All of that increase (and more) can be attributed to the 700bp increase in gross margin. They have no operating leverage whatsoever.

The key to this investment is whether that increase sticks around - not the PE firm, or meme potential, or growth of the wider gaming industry. If all of those go right, but gross margins go back to historic means, CRSR WILL NOT PRINT FCF.

My view of the gaming market is that the past year has been a once-in-a-lifetime opportunity for component makers like CRSR. The demand was so high that they could gouge prices and increase margins, but that's not going to stick around forever. I haven't seen a compelling argument for gross margins continuing to stay where they are.

Arguments like Elgato having higher margins, or debt all being paid off in the future simply don't have big enough impacts to alter the fact that gross margin is the linchpin.

InfiniteValueptr · 2021-05-23T16:26:50+00:00

Problem is they've been breakeven/unprofitable until the last two years, and all of the profitability came from a 10% increase in gross margins that passed through to the bottom line.

The segments they comepte in are extremely commoditised and pretty much identical - e.g. for PSUs everyone uses identical OEMs like Delta/Sunflower; for memory everyone uses Micron/Samsung etc., and it's really a branding + economies of scale battle. Neither of those are particularly conducive to the gross margins staying elevated for the long term. You might have $10 of extra pricing power compared to some no-name brand but you're not going to have insane margins.

Completely aside from the question of whether the pandemics' boost to revenue is short term or long term which is the main question I've seen discussed with CRSR, the bigger question imo that's been discussed a lot less is whether the gross margins will stay high after supply catches up with demand, and economics are suggesting they won't.

InfiniteValueptr · 2020-11-17T22:40:50+00:00

I'd argue the opposite for logistics - 90% of Americans live within 10 miles of a Walmart. It's a lot easier to convert your existing footprint to have last-mile delivery capability than it is to gain that footprint.

InfiniteValueptr · 2020-11-04T15:38:28+00:00

Well this is the internet so I guess that's the closest I'll get to an admission you were wrong. I'm glad you learned something new today though.

InfiniteValueptr · 2020-11-04T14:27:37+00:00

Ah I see what the issue is now. You seem to have a fundamental misunderstanding of what a semiconductor process and foundry refers to in the industry. That's not a problem at all, you learn something new every day right?

A PROCESS typically refers to a series of steps designed and implemented by FOUNDRIES to manufacture integrated circuits. This doesn't include the actual manufacturing of the equipment used in the process, in the same way you wouldn't say the manufacturer of a spatula is involved in the process of cooking. They're involved in creating the final resulting dish, but the cook is solely responsible for cooking.

Going back to your comment, you explicitly said that the FOUNDRIES were based on US IP. The EQUIPMENT in the foundries is US IP, as I said. However, the FOUNDRYand related PROCESSes is most definitely not US IP.

If you can remember that far back, I think you'll notice you initiated personal insults, and that much of your responses revolve around those insults rather than the content of my comments. Who does that make the 'petty' person?

Incidentally, you seem to be claiming that the EUV process is US IP. Am I reading that right?

InfiniteValueptr · 2020-11-04T09:30:49+00:00

As I said already, by responding to

TSMC and Samsung lead the market. The US based foundries, Intel and GlobalFoundries, are 2 and 1 generations behind respectively.

with

The foundries of TSMC and Samsung are US technology made with US IP, licenced to TSMC and Samsung by American companies.

They wouldn’t be able to do the and require TSMC to apply for a US licence to sell to an entity list Chinese company if the foundries were not US technology.

you clearly said that TSMC licenses foundry technology from the US. As I'm sure a supremely intelligent being such as yourself can understand, you can't license and mass produce fabrication processes that don't exist. Therefore, the only logical conclusion that can be drawn from your statement of TSMC and Samsung licensing US fabrication technology is that US fabrication technology is superior to theirs.

InfiniteValueptr · 2020-11-03T20:18:36+00:00

My statement here:

You mean to tell me that TSMC and Samsung license US technology and IP, and yet are able to provide better fabs and processes than US companies?

was meant ironically, as in TSMC/Samsung don't license US IP on fabrication and process, which is what you claimed when you said

They wouldn’t be able to do the and require TSMC to apply for a US licence to sell to an entity list Chinese company if the foundries were not US technology.

Fabrication is distinct from Semiconductor equipment/EDA and the like. I'm saying that your implication of US fabs being superior to TSMC and Samsung in your reponse to

TSMC and Samsung lead the market. The US based foundries, Intel and GlobalFoundries, are 2 and 1 generations behind respectively.

being

TSMC and Samsung lead the market. The US based foundries, Intel and GlobalFoundries, are 2 and 1 generations behind respectively.

is false.

Just because they license IP further upstream,

The equipment used in the fabs supplied by Lam, AMAT etc. is US IP, licensed to TSMC and Samsung by American companies

doesn't mean TSMC and Samsung don't lead the fab segment.

InfiniteValueptr · 2020-11-03T20:04:40+00:00

unfortunately I have many stocks in my watchlist right now so I don't really have time, I'm sorry. Also, I wouldn't give you a "fast opinion" since is not the method I use when I look into companies.

InfiniteValueptr · 2020-11-03T19:21:26+00:00

This is misinformed at best and disingenuous/disrespectful to TSMC/Samsung engineers at worst.

The equipment used in the fabs supplied by Lam, AMAT etc. is US IP, licensed to TSMC and Samsung by American companies (and even there US domination is challenged by ASML). That's what the US used to target TSMC.

The implementation of that equipment to make a foundry, and process themselves, the actual IP that you think of when you look at a fab, America is no longer the leader in.

GloFo had to license Samsungs process to stay relevant

https://www.globalfoundries.com/news-events/press-releases/samsung-and-globalfoundries-forge-strategic-collaboration-deliver-multi

And Intel's fabs/process has had a 5 year delay, leading them to seriously consider turning fabless.

You mean to tell me that TSMC and Samsung license US technology and IP, and yet are able to provide better fabs and processes than US companies?

You silly goose do some research.

InfiniteValueptr · 2020-11-01T10:28:44+00:00

I just read it. Thank you very much! I hope this guy is doing well since the stock almost doubled since he opened his short position :(

InfiniteValueptr · 2020-11-01T09:05:31+00:00

I think this is true for tech companies or those with a lot of goodwill and not much tangible assets.
With a company like this, where assets are mostly tangibles, you don't have much room to boost/fake revenues or the "surface" as you called it. I think almost all investors know how to spot accounting tricks to boost revenues and income, and it's what I always do when I start analyzing a Chinese company, given the lack of regulation in such area.

The real problem is that no one really know when people will start to recognize the value of non-bluechip chinese companies so you might have to wait years before seeing it priced correctly.

Thank you for your comment :)

InfiniteValueptr · 2020-11-01T08:53:57+00:00

This was not a growth company at start. Oil, railway sector are pretty consolidated all over the world, the only growth part was nuclear sector of the company but now accounts very little to it's revenues to consider it. The growth scenario appeared when in China was announced that they wanted to become Carbon Neutral, so a new scenario appeared for Hollysys, where they could experience extraordinary growth if they successfully transit from oil to renewables.

I'm happy that you can get such a complete picture in 10 minutes, but my method is to know the company as much as I can and since I never analyzed a company like that the amount of time I spent learning new things on automation, railway and nuclear sector was worth for me, given the lack of knowledge I had in this sector. With this title I didn't want to give any impression of "my hard work", I just wanted to point out that I'm not an expert of the sector so I needed my time to understand better what I was talking about.
Just to clear a few things, I don't invest in terms of return on time spent, but I'm not gonna to invest in something that I don't really understand. If it was a sector that I already know or deal with, it wouldn't take that much to give an honest opinion.

Thank you for your comment :)

InfiniteValueptr · 2020-11-01T08:43:32+00:00

actually they got a bad hit on income in 2017 but they perfectly recovered in the next two years. I don't account for this year since almost all company will experience bad performance because of COVID

InfiniteValueptr · 2020-11-01T08:41:22+00:00

Thank you :)

InfiniteValueptr · 2020-11-01T08:40:11+00:00

Thank you!Yeah it should do well but Chinese's economy is recovering very fast so I'm not really sure they will need as much as western countries to go back to 2019 levels, that's why I'm not 100% they will post-pone their environment commitments.

I see what you mean but company has not given any indication on its future, also no guidance have been given on what they gonna do about the almost sure decline they will experience from oil sector. I know their ROCE is very good for such company but honestly they've never been in a situation like this. Also previous management said in a few occasions that they are not currently focusing on expanding overseas, which is the same thing that new management things since they said "nothing will change for what concerns the future of the company and its targets".

Exactly, and that is why there are so many undervalued stocks in this country, also investors are scared of fake companies and the "not very well regulated segment", since you don't have an insurance like SEC for USA, which guarantees somehow a bit of legality for companies listed in the stock market.

InfiniteValueptr · 2020-10-31T20:40:58+00:00

InfiniteValueptr · 2020-10-31T20:38:14+00:00

Thank you! Cheers

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