If I had to be critical of $SIVE earnings:
1. Management underweighted the two disclosures that matter most.
-> 6 pluggable engagements
-> Foundry capacity (during an industry bottleneck)
That's the most important part of the call and should have been the focus to provide economic scale of them. But we got 2-3 sentences about it.
And it shouldn't take an Anime avatar on X to talk most about the implications of those.
2. CFO needs retraining or bring on a new one.
The lawyer like answers were infuriating to listen to as a shareholder. Even I got pissed off with this statement:
"we will evaluate the timing and decide whether the conditions are right to move forward at that particular time."
It should be a 100% given by now they file for dual listing to escape hostile Swedish markets.
Shareholders didn't fund a future growth type company to hear lawyer-like answers.
Again, this was probably one of the worst answers the CFO could have gave and there needs to be firm commitment along with faster timelines.
3. $70M should have gone toward M&A and dual listing.
-> Brutally honestly speaking, it's a waste of capital to focus on hybrid manufacturing at this stage and I was disappointed to hear this during this timeframe.
It's eventually needed but with 2 foundry suppliers
-> You have a ton of new capital and large marketcap.
Use it to pull $AVGO style acquisitions of Cloud Light style IP for pluggables or optical engines.
Lumilens went from 0 -> $5.5B in 2 years and now with hyperscaler engagements.
Sivers should expand out of the laser chokepoint as fast as possible and not stay just a component vendor.
And most of all, who cares about competing with customers? If a customer says: "if you do pluggables, we'll go with other players for lasers"
who?? $LITE / $COHR / $AAOI reroutes their lasers to internal usage. Lot of your Asian players already allocated.
Abuse the current bottleneck as much as possible because there's almost no qualified choices left.
And I'm certain all the partners are trying to vertically integrate upward toward the laser level too and compete.
If there was a new OE/pluggable accusation attempted during the Q2 time frame, things would have been a lot different.
_
TLDR:
$SIVE should aim to be the next $LITE and blitzscale like a Silicon Valley company.
Use that $70m capital to move faster H2, and at the bare minimum finish readiness then. And expect NASDAQ listing to be finished H1 2027.
Not "evaluation" at that timeframe.
And use the capital + equity to expand downward into optical engines/ELS/optical transceivers using your equity valuation, and buy a Celestial/Ayar/Cloud Lite type startup.
As for the wording of the call, markets care about economic value of the foundry allocation + 6 pluggable players, not other business segments.
$SIVE has been extremely conservative to date, but
they need to speed up and communicate to forward looking US/Int shareholders.
Not geared toward local Swedish audiences who care about Q2/TTM revenue.
Otherwise they'll be treated like an Asian component supplier and eventually be valued like an EU one.
Quoted context
These are the quoted author’s words.
$SIVE ER transcript just dropped, TLDR:
- 6 NEW pluggable players working with Sivers now.
Probably the biggest news of the entire ER next to new foundry allocations.
"3 are in alpha sample evaluation stage" and another 3 in technical engagement / supply assessment stage."
And now it makes more sense why their $1.2B revenue pipeline ballooned (since this was a bigger leap than Jabil).
- Initial production orders with $JBL expected in the first half of 2027, with the production ramp planned second half of 2027
LFG, Jabil is a massive hyperscaler supplier and finally got clear timelines on revenue from volume ramp.
- "new foundry partner who has brought on tremendous capacity that is available now"
This is what I wanted to hear. Apparently they've been in the works for this for awhile since it's "available now", and THIS IS VERY MATERIAL.
CW lasers are in a massive shortage and $SIVE brought on new supply outside of Win Semi (also de-risks).
As you hear with other qualified CW players (anything they make gets sold), so as Sivers partners finishes their qualifications, I'm expecting the same.
- "long-term capacity model where one-third of manufacturing capacity will be internal, while two-thirds will come from our foundry partners"
Lukewarm on this, it makes sense they need to be vertically integrated like $AAOI / $LITE eventually but implies more capex (better after NASDAQ listing).
As you see with ESMT + DDR2 bottlenecks, the operating income they get from just securing wafers during shortages and doing fabless models is incredible.
And it would make more sense to fund this with cashflow down the road.
- NASDAQ listing ongoing. CFO gave a very lawyer like answer, but on track as usual.
- "We do not see production capacity as a bottleneck at this point in time"
This is very meaningful since with their new foundry partners, implies $SIVE is coming online with a very material CW laser supply to a bottlenecked market.
TLDR:
- NEW substantial FOUNDRY ALLOCATION! (very, very material during CW laser shortage)
- 6 new pluggable players outside of $JBL
- Clear revenue ramp timelines from Jabil
Heavy focus on pluggables -> NPO -> CPO seems like the progression. Only lukewarm piece was building up internal capacity but it's long term positive.
Anyway, very happy after reading the transcript aside from potential capex prioritizing laser capacity (which is fine too during an industry shortage) over IP acquisition.
The 6 new pluggable players + substantial wafer allocation "available now" is a pretty insane disclosure.
aleabitoreddit ↗