Merrion rates Parthus a buy

PARTHUS TECHNOLOGIES plc has been rated a clear buy by stockbrokers Merrion Capital, who say the Dublin-based mobile chip and software designer is well placed to exploit any pick-up in the tech sector.

Merrion analyst John Coolican said despite a 12% revenue decline to $9.5m Parthus will “undoubtedly benefit from recovery when it happens. At these levels it is a clear buy.”

Mr Coolican says at $1.88 per share, Parthus has a market cap of $110m.

“This is largely backed by its net cash position, which we estimate to be at least $105m at the end of the third quarter. Post merger and distribution of the special dividend the cash balance of ParthusCeva is expected to be at least $80m. Despite weakening sales the company has and, unless there is a significant further deterioration in demand is likely to have, a very low operational cash burn,” he forecast.

Parthus said total operating costs for the third quarter 2002 amounted to 16.9m, compared with total operating costs of 27.9m for the third quarter 2001, a 38% fall. Davy Stockbrokers analyst Paul Phelan said licence and royalty revenue made up most of the shortfall, declining 13% sequentially, with the weakness attributed to a combination of the streamlining announced in August and the continuing industry downturn.

Mr Phelan said operating costs were $16.9m, higher than their $16.2m forecast.

Mr Phelan said no further company details are expected until next week when full results will be provided.