) to sell from hold.
Analyst Cody Acree says multiple variables have contributed to Silicon Lab's premium valuation; he believes a shift in sentiment of a few points could result in significant multiple contraction. He also sees the heightened risk that holiday handset sales will not be enough to absorb strong third quarter and fourth quarter component shipments.
Acree says his checks indicate that a competitor, Skyworks Solutions, may have won a deal to provide wireless chips for Wavecom's new quad-band WISMO 5100 for general packet radio system standards (GPRS). Wavecom makes digital wireless standard modules, known as WISMO modules, for use in mobile phones and other wireless applications, based on the global system for mobile communications (GSM) and GPRS standards. Wavecom is Silicon Labs' largest customer.
Acree says other risks center around Wavecom's market share in China, market penetration of direct conversion radios, and weak wireline growth.