24/7 Wall St. » AMD

24/7 Wall St. Closing Bell (AAPL, GS, SBUX, ORCL, RF, ZNGA, AMD, ALTR, YHOO, COP, PX, WLP, LCC, XRX, ILMN, RBCN, INCB, GNOM, NUVA)

Paul Ausick — Wed, 25 Jan 2012 21:08:16 +0000

Markets opened mixed this morning, with the DJIA and S&P 500 opening lower and the Nasdaq Composite opening higher. The Nasdaq was getting a big push from the very strong earnings report out of Apple Inc. (NASDAQ: AAPL). The FOMC’s announcement that interest rates would remain near zero until late 2014 started a Fed rally and pushed the S&P into positive territory where they spent the rest of the day. Oil prices were lower this morning, but the weekly status report from the US Energy Information Administration led crude prices to a gain. WTI crude oil is up 0.72% at $99.66/barrel and Brent crude is up 0.16% at $110.21. Gold closed up 2.61% at $1,707.90.

The unofficial closing bells put the DJIA up more than 83 points to 12,758.85 (0.66%), the NASDAQ rose nearly 32 points (1.14%) to 2,818.31, and the S&P 500 rose 0.87% or more than 11 points to 1,326.06.

There were several analyst upgrades and downgrades today, including Goldman Sachs Group Inc. (NYSE: GS) cut to ‘neutral’ at JPMorgan; Starbucks Corp. (NASDAQ: SBUX) raised to ‘outperform’ at Oppenheimer; Oracle Corp. (NASDAQ: ORCL) cut to ‘neutral’ at Macquarie; and Regions Financial (NYSE: RF) raised to ‘outperform’ at RBC Capital and cut to ‘neutral’ at BofA/Merrill Lynch. Znyga Inc. (NASDAQ: ZNGA) gets starting calls from four brokers: ‘overweight’ at Barclays and JPMorgan; ‘buy’ at Goldman Sachs; and ‘neutral’ at BofA/Merrill Lynch.

Earnings reports since markets closed on last night have led to some price changes as of the last half hour of trading today: Apple is up 6.4% at $447.17, after posting a new 52-week high this morning of $454.45; Advanced Micro Devices Inc. (NYSE: AMD) is up nearly 3% at $6.72; Altera Corp. (NASDAQ: ALTR) is up 1% at $40.54; Yahoo! Inc. (NASDAQ: YHOO) is down -0.6% at $15.60; ConocoPhillips (NYSE: COP) is down -0.9% at $70.01; Praxair Inc. (NYSE: PX) is down -2.8% at $106.05; Wellpoint Inc. (NYSE: WLP) is down -4.9% at $66.01; US Airways Group Inc. (NYSE: LCC) is up more than 18% at $7.59; and Xerox Corp. (NYSE: XRX) is down nearly -10% at $7.81.

Other standouts from today include the following stocks:

Illumina Inc. (NASDAQ: ILMN) is up more than 46% at $55.16. The genetic testing instrument maker is the target of a $5.7 billion hostile takeover offer from Roche Holdings AG.

Rubicon Technologies Inc. (NASDAQ: RBCN) is down nearly -12% at $10.66. The LED lighting maker was downgraded from ‘buy’ to ‘hold’ at Needham yesterday on low demand.

Indiana Community Bancorp (NASDAQ: INCB) is up about 44% at $20.90 after posting a new 52-week high of $21.34 earlier. The bank holding company has agreed to be acquired by Old National Bancorp (NYSE: ONB) in an all-stock transaction.

Complete Genomics Inc. (NASDAQ: GNOM) is up 19% to $2.98. The DNA-sequencing company is getting a boost from the hostile takeover bid for Illumina.

NuVasive Inc. (NASDAQ: NUVA) is up about 19% at $16.31. The medical device maker had its shares stopped today following a report that it would not receive an injunction against selling a disputed product.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – Durable goods orders
8:30 a.m. – New claims for unemployment benefits
10:00 a.m. – New home sales
10:30 a.m. – EIA weekly natural gas storage report
4:30 p.m. – Fed balance sheet and money supply reports

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: AAPL, ALTR, AMD, COP, GNOM, GS, ILMN, INCB, LCC, NUVA, ORCL, PX, RBCN, RF, SBUX, WLP, XRX, YHOO, ZNGA

Media Digest (1/25/2011) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Wed, 25 Jan 2012 11:35:38 +0000

Apple (NASDAQ: AAPL) has another blow-out quarter driven by iPhone sales. (Reuters)

Japan has its first trade deficit since 1980. (Reuters)

Yahoo! (NASDAQ: YHOO) posts weak earnings on a revenue drop. (Reuters)

International Monetary Fund’s Lagarde says that if Europe combined the ESFS and ESM rescue funds, it would raise confidence in the chance that a bailout of weak economies would work. (Reuters)

A PricewaterhouseCoopers study shows CEOs are concerned about a negative reaction to the situation in Europe. (Reuters)

More cracks are found in the wings of Airbus A380 super jumbos. (Reuters)

Roche offers $5.7 billion to buy gene map firm Illumina (NASDAQ: ILMN). (Reuters)

The Baltic Exchange’s measure of the cost of shipping commodities plunges, an indication of a slow economy. (Reuters)

Ericsson’s (NASDAQ: ERIC) shares plunge after it said profit for Q4 dropped sharply. (Reuters)

Facebook will suspend trading in its shares for three days, but does not explain why. (Reuters)

EU executives will block an NYSE Euronext (NYSE: NYX) merger with Deutsche Borse. (Reuters)

Google (NASDAQ: GOOG) to combine information on users, which will make it harder for them to keep private. (WSJ)

Morgan Stanley (NYSE: MS) presses to lead the Facebook IPO. (WSJ)

The parent company of British Air may be part of an AMR buyout. (WSJ)

The IMF cuts its forecasts for most nations around the world. (WSJ)

AMD (NYSE: AMD) shows a loss on large write-downs. (WSJ)

The Defense Department to reveal its plans for budget cuts. (WSJ)

The PMI of many parts of Europe rises. (WSJ)

EU finance ministers press Greece and its private creditors to settle differences on refinancing. (WSJ)

General Motors (NYSE: GM) is accused of using the government bailout as the means to make the Chevy Volt. (WSJ)

McDonald’s (NYSE: MCD) quarter is driven in part by late-night food sales. (WSJ)

Del Frisco’s Restaurant Group plans to go public to raise $100 million. (WSJ)

Olympus is in talks with Sony (NYSE: SNE) to raise $1.3 billion. (WSJ)

The Avenue Capital Group will take over Quiznos as part of a debt restructure. (WSJ)

Gannett (NYSE: GCI) buys Fantasy Sports Ventures so that it can focus more on sports news. (WSJ)

Daniel Mudd, CEO of Fortress (NYSE: FIG), leaves after charges of securities fraud. (WSJ)

Morgan Stanley makes only a small number of its executives new managing directors. (WSJ)

European banks restructure to improve balance sheets, but some moves may be blocked by regulators worried the changes could hurt the financial system. (NYT)

The European Central Bank faces losses on Greek bonds that could reach 55 billion euro. (NYT)

Oil imports helped drive Japan’s rare trade deficit. (NYT)

The IMF presses the ECB to take larger losses on Greek bonds. (FT)

Citigroup (NYSE: C) may make more spending cuts in its securities group. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, AMD, C, ERIC, FIG, GCI, GM, GOOG, ILMN, MCD, MS, NYX, SNE, YHOO

Potential Upside in Semiconductor Stocks (INTC, AMD, MU, BRCM, QCOM, ARMH, SNDK, ALTR, AMAT, TXN)

Paul Ausick — Mon, 23 Jan 2012 16:13:41 +0000

Since the beginning of the year the Philadelphia Semiconductor Index is up more than 13.5%. The run-up may be over for some chip makers and sustainable for others. Analysts are also a little behind in setting new price targets for the companies that have passed or are near previous target prices. Perhaps they’re just taking their time to see what happens with the earnings reports due this week.

We’ve looked 10 semiconductor companies and evaluated their chances of reaching existing price targets during the coming year. The companies are Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), Qualcomm Corp. (NASDAQ: QCOM), ARM Holdings plc (NASDAQ: ARMH), SanDisk Corp. (NASDAQ: SNDK), Altera Corp. (NASDAQ: ALTR), Applied Materials Inc. (NASDAQ: AMAT), and Texas Instruments Inc. (NYSE: TXN). Data comes from Yahoo! Finance and MarketWatch.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27 and current price around $26.83, for a potential upside of about 1%. Intel reported stellar earnings last week and the stock posted a new 52-week high earlier this morning. Sales of PCs have not been as weak as feared, and margins have remained high. The new Ultrabooks, which the company is supporting with a very strong marketing budget, could really push the company substantially higher. As of this moment though, shares are fully valued.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $6.00 and a current price around $6.55, leaving no upside. The company reports earnings tomorrow and is expected to post EPS of $0.16 on revenue of $1.72 billion. The company’s shares have jumped by about a dollar in the past month, and continued improvement, especially in the server market, should push the target price higher.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $8.75 and a current price around $8.00, for a potential upside of 9%. Last month the company’s price target was $8/share and the shares were trading at around $6.25. How much more steam can be left in Micron after that?

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $41 and a current price around $34.92, for a potential upside of 17%. Broadcom shares have risen by more than $5/share in the last month, but unlike Micron, there’s still a lot of headroom.

Qualcomm Inc. (NASDAQ: QCOM) has a median price target of $67 and a current price around $58.60, for a potential upside of 14%. Qualcomm shares have gained more than 7% in the first three weeks of the year and the share price is up more than $4. The company has a firm position in the mobile device market and the company should continue to post growth in 2012.

ARM Holdings plc (NASDAQ: ARMH) has a consensus price target of $33.75 and a current price around $27.75, for a potential upside of more than 22%. ARM’s target price has jumped by nearly $7/share in the past month, but it is trading at nearly the same price as a month ago. Shares gained nearly 35% in the past year, but royalty payments are falling. For the year-to-date, shares are slightly down. To hit its new target, ARM has to get going.

SanDisk Corp. (NASDAQ: SNDK) has a consensus price target of $59.50 and a current price around $51.87, for a potential upside of 14.7%. SanDisk’s shares are up about 5.5% so far this year after a nearly flat 2011. Apple’s recent acquisition of of a NAND maker could sharply curtail SanDisk’s sales of the chips for iPhones and iPads.

Altera Corp. (NASDAQ: ALTR) has a consensus price target of $43 and a current price around $39.90, for a potential upside of 7.8%. Altera’s price target has been raised in the past month, and the company’s share price is also higher. Shares have risen more than 7% year-to-date, and the company is expected to report EPS of $0.42 and revenue of $447.52 million tomorrow.

Applied Materials Inc. (NASDAQ: AMAT) has a median price target of $13 and a current price around $12.29, for a potential upside of 5.8%. AMAT’s shares have jumped more than 15% since the beginning of January, and the price target has not changed. There’s not a lot to like here as far as expected upside goes.

Texas Instruments Inc. (NYSE: TXN) has a consensus target price of $34 and a current price around $33.42, for a potential upside of less than 2%. TI is expected to report EPS of $0.39 and revenue of $3.25 billion after the market closes today. The company lowered estimates in December, and there’s a decent chance TI will beat those lowered expectations. If so, a new target nearer the company’s 52-week high of $36.71 would be in order. That could raise upside potential to around 12%.

In the last month, Intel has essentially hit its target price, and because the target hasn’t been raised, there could be some question among analysts about the staying power of the recent rise. Broadcom and Qualcomm offer the best bets to post share price gains, and the targets for both are well within reach.

Paul Ausick

Filed under: Earnings, Industry, Semiconductor, Semiconductors, Technology Tagged: ALTR, AMAT, AMD, ARMH, BRCM, INTC, MU, QCOM, SNDK, TXN

Apple Supplier List Revealing (AAPL, AMD, CY, BRCM, FCS, FLEX, JBL, VSH, TQNT, SNDK, ONNN, QCOM)

Paul Ausick — Fri, 13 Jan 2012 19:04:59 +0000

For the first time ever, Apple Inc. (NASDAQ: AAPL) has released a list of its 156 suppliers in connection with the company’s release of its supplier responsibility audit. The supplier list is available here. According to the full report, these companies represent recipients of 97% of Apple’s supplier payments.

Many of Apple’s suppliers are well-known, but the list includes Advanced Micro Devices Inc. (NYSE: AMD), Cypress Semiconductor Corp. (NASDAQ: CY), Broadcom Corp. (NASDAQ: BRCM), Fairchild Semiconductor International Inc. (NYSE: FCS), Flextronics International Ltd. (NASDAQ: FLEX), Jabil Circuit Inc. (NYSE: JBL), Vishay Intertechnology Inc. (NYSE: VSH), TriQuint Semiconductor Inc. (NASDAQ: TQNT), SanDisk Corp. (NASDAQ: SNDK), ON Semiconductor Corp. (NASDAQ: ONNN), and Qualcomm Inc. (NASDAQ: QCOM).

The report is based on 229 audits, of which 14 were specialized environmental audits and 27 process safety audits. Apple found 6 current cases of suppliers hiring underage workers and 13 historical cases of child labor violations. About these violations, the company said:

In each case, the facility had insufficient controls to verify age or detect false documentation. We found no instances of intentional hiring of underage labor. We required the suppliers to support the young workers’ return to school and to improve their management systems—such as labor recruitment practices and age verification procedures—to prevent recurrences.

Chinese environmental groups last year charged that 27 of Apple’s suppliers were dumping toxic gases and heavy metal sludges into the country’s land and air. The company’s audits revealed that 112 supplier facilities were not properly storing, moving, or handling hazardous chemicals correctly; 69 facilities were illegally dumping or failing to recycle hazardous waste; and 52 facilities failed to label hazardous materials. Apple also reported that 58 facilities failed to monitor and control air emissions.

Apple had come under increasing pressure to name its suppliers and to hold them to a higher standard following suicide attempts by 18 workers and 14 deaths at China’s Foxconn facility in 2010.

Paul Ausick

Filed under: China, Consumer Electronics, Industry, PC Companies, Technology, Technology Companies Tagged: AAPL, AMD, BRCM, CY, FCS, FLEX, JBL, ONNN, QCOM, SNDK, TQNT, VSH

Upside in Top Semiconductor Stocks for 2012 (INTC, AMD, MU, BRCM, QCOM, ARMH, SNDK, ALTR, AMAT, TXN)

Paul Ausick — Thu, 29 Dec 2011 17:30:49 +0000

Shares in semiconductor stocks have gained and lost value in about equal number during 2011. The run-up in share prices may be over for some and sustainable for others. For stocks that lost value during the year, gains in 2012 may be difficult to come by as the overall market for semiconductors has been getting softer as the new year gets closer.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27 and current price around $24.47, for a potential upside of 10.3%. Intel has put a lot of marketing muscle behind its Ultrabook design, with more models to come from more manufacturers in 2012. A new version of the Windows operating system is also due in late summer that should help with Ultrabook sales. Intel still hasn’t come up with a strategy to attack the mobile device market, and while that won’t be fatal, it could weigh on revenue and profits next year unless the Ultrabook is a blowout success.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $6.20 and a current price around $5.36, for a potential upside of 15.7%. AMD’s share price fell more than -33% in the past 12 months. The company introduced a new high-speed graphics chip recently that has been well-received. AMD’s server market share is wobbly though, although it has made progress in notebooks. But expecting a gain of more than 15% seems like wishful thinking.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $8 and a current price around $6.24, for a potential upside of 28.2%. Micron’s shares jumped last week on a weak earnings report primarily on the basis of more expected consolidation in the DRAM market. Pricing has been weak for DRAM chips, but Micron is in a better position than most competitors to be among the survivors. Still, a lot of things need to go right for the company to hit its price target.

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $41 and a current price around $29.53, for a potential upside of 38.8%. Broadcom has posted strong revenue and profit growth in 2011, but its share price has fallen by about -32%. Revenue and profit are both expected to continue growing in 2012, and the company is not a bad bet to hit its current price target.

Filed under: Analyst Calls, Industry, Semiconductor, Semiconductors, Technology, Technology Companies Tagged: ALTR, AMAT, AMD, ARMH, BRCM, INTC, MU, QCOM, SNDK, TXN

Media Digest (12/14/2011) Reuters, WSJ, NYTimes, FT, Bloomberg

247wallst — Wed, 14 Dec 2011 11:24:51 +0000

A CME (NASDAQ: CME) executive says Jon Corzine knew about money that MF Global transferred to European accounts. (Reuters)

Accounting problems at Olympus may make it a takeover target. (Reuters)

Italian bond yields hit a eurozone record. (Reuters)

Avon Products (NYSE: AVP) replaces its CEO. (Reuters)

China vows to keep its economy growing despite difficulties elsewhere. (Reuters)

HTC says a ruling on IP issues with Apple (NASDAQ: AAPL) has been delayed. (Reuters)

The euro hits an 11-month low. (WSJ)

Olympus restates earnings. (WSJ)

Best Buy (NYSE: BBY) earnings come in below expectations, due in part to competition with Amazon.com (NASDAQ: AMZN). (WSJ)

General Electric (NYSE: GE) will find its earnings undermined in Europe. (WSJ)

The head of AMD (NYSE: AMD) plays down parts shortages after Intel (NASDAQ: INTC) warns on earnings. (WSJ)

The National Transportation Safety Board calls for a ban on cellphone use and text devices in cars. (WSJ)

A fight about payroll taxes delays the federal budget bill. (WSJ)

California must make $981 million in mid-term budget cuts. (WSJ)

Chrysler’s CEO says the company could make a $3 billion operating profit next year. (WSJ)

Morgan Stanley (NYSE: MS) must return about $700 million to investors in its flagship global real-estate fund. (WSJ)

MBIA (NYSE: MBI) will pay Morgan Stanley $1.1 billion to settle allegations of selling guarantees on real estate. (WSJ)

Commerzbank may have too small a capital reserve if eurozone financial problems worsen. (NYT)

The Organisation for Economic Co-operation and Development says members must defend internet freedoms. (NYT)

International Monetary Fund officials urge more austerity for Greece. (NYT)

EU officials say the a new treaty already is beset by political arguments. (FT)

GE’s Immelt says the company could have double-digit growth if its industrial operations do well. (FT)

EBay’s (NASDAQ: EBAY) PayPal will challenge Groupon (NYSE: GRPN) and LivingSocial. (Bloomberg)

Members of OPEC, including Iran and Saudi Arabia, agree the group should set a production ceiling of 30 million barrels a day. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, AMD, AVP, BBY, CME, EBAY, GE, GRPN, INTC, MBI, MS

Intel Warning Knock… Market Inefficiency Reigns (INTC, TXN, ALTR, WDC, SMH, AMD, MU)

Administrator — Mon, 12 Dec 2011 14:23:34 +0000

Intel Corporation (NASDAQ: INTC) may be a recent position added to the Berkshire Hathaway Inc. (NYSE: BRK-A) stock holdings portfolio, but the semiconductor and processor giant is now issuing an earnings warning. If you have been tracking the news out of Texas Instruments Inc. (NYSE: TXN), Altera Corporation (NASDAQ: ALTR), and Western Digital Corporation (NYSE: WDC), today’s news might not seem like such a surprise. What matters is that the condition is expected to remain.

Intel said that its key fourth-quarter results “are expected to be below the company’s previous outlook due to hard disk drive supply shortages.” The new fourth-quarter revenue target is $13.7 billion, plus or minus $300 million. The prior target had been $14.7 billion, plus or minus $500 million.

Where this gets interesting is that Intel says personal computer sales will be up sequentially but that the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages. Analysts had been warning about this last week and before for both Intel and the rest of the PC and semiconductor chain.

Unfortunately, Intel said that it expects hard disk drive supply shortages to continue into the first quarter. The current expectation is that there will then be a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012.

The Semiconductor HOLDRs (NYSE: SMH) is trading down nearly 2% on the news out of Intel this morning, while Advanced Micro Devices, Inc. (NYSE: AMD) is down 2% at $5.42 right before the open. Micron Technology Inc. (NASDAQ: MU) is down 2.2% at $5.76 in the pre-market.

Gross margin is now put at 64.5%, plus or minus 2%, versus the prior forecast of 65% (plus or minus 2%); non-GAAP gross margin is expected to be 65.5% (+/- 2%) versus a prior target of 66% (+/- 2%).

Intel also noted that its earnings and news quiet period will begin on December 16 and that its earnings will be released on January 19, 2012.

Shares of Intel had been at $25.01 and its 52-week trading range is $19.16 to $25.78. The pre-market trading is showing a drop of 3.2% at $24.20. The market had been given warnings of this but no one ever seems to want to admit that just because a sector is slowing and has high supply problems that a warning will still come. Had more warnings from analysts (and chip peers) in recent days and weeks not been given out, then the reaction may have been far worse.

JON C. OGG

Filed under: Earnings Warning, PC Companies, Semiconductor, Technology Companies Tagged: ALTR, AMD, INTC, MU, SMH, TXN, WDC

Potential Upside Among Chip Maker Stocks (INTC, AMD, BRCM, ARMH, QCOM)

Paul Ausick — Wed, 30 Nov 2011 18:25:34 +0000

The landscape continues to shift in the chip market and semiconductor makers are doing what they can to shift with the times. The move to more mobile devices like smartphones and tablets and away from desktop PCs is expected to continue and gather strength in 2012. Today we’ll look at target prices and potential upside at five chip makers: Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Broadcom Corp. (NASDAQ: BRCM), ARM Holdings plc (NASDAQ: ARMH), and Qualcomm Corp. (NASDAQ: QCOM). There appear to be some imminent changes to some longer term strategies in the chip making business.

Intel’s median target price is $27.00, unchanged from a month ago. The company’s shares posted a new high in the last month of $25.50, and are trading at $24.81 at around noon today. The implied gain based on the current target price and today’s share price is 8.8%. That’s the lowest among these five stocks, but Intel pays a 3.6% dividend yield, well above any of the others. CEO Paul Otellini told a technology conference yesterday that the company is focused on a three-pronged strategy aimed at emerging markets, where PC sales are strong; the Ultrabook market, which is off to a good start and expected to improve; and higher server sales. Otellini admitted that Intel doesn’t have a lot of mind share, or market share, in the mobile market, but expects that to change with the delivery of Windows 8 from Microsoft Corp. (NASDAQ: MSFT).

AMD’s median target price is $6.20, about -5% lower than it was a month ago. Shares are trading today at $5.62, for a potential gain of 10.3%. The company has given some hints about its future plans now that a new CEO is in place, and the big change is that AMD no longer sees Intel as its chief competitor. The integrated microprocessing-graphics market, known as System-on-a-Chip, is the market that AMD plans to focus on. Qualcomm and Nvidia Corp. (NASDAQ: NVDA), among others, are the leaders here, but AMD thinks that its ATI graphics capabilities give it a good shot to compete here. This strategy is expected to be spelled out in more detail in February.

Broadcom’s median target price is now $41.50, down about -7.8% from its level of a month ago. Shares are trading today at $29.86, which calculates to a potential upside of 39%. The company also got a boost today from a report out of Lazard Capital Markets indicating that Broadcom can afford to raise its dividend beyond the current yield of 1.2%. That may be true, but the high upside potential is a combination of a lower target price and a 14.4% drop in the share price over the past month.

ARM Holdings’ median target price has jumped about 32% in the past month, to $35.00. Shares are trading at $28.05 today, indicating an upside potential of 24.8%. ARM stands to benefit more than any other chip maker from the release of Windows 8, which will include support for the chip for the first time. There is some skepticism about the impact of Windows 8, given that it isn’t expected to be available until the end of next year.

Qualcomm’s median price target is $67.00, up about 3% from its level of a month ago. Shares are trading today at $54.90, for a potential upside of 22%. The company has been getting ratings boosts from analysts for weeks now, with Goldman Sachs including Qualcomm on its list of nine technology stocks to own in 2012. The recent announcement by HTC Corp. that it would not meet its fourth-quarter revenue target is expected to cost Qualcomm a penny in earnings for the quarter, so everything isn’t as rosy as it might appear.

It’s hard to argue against Qualcomm as the choice among these five stocks based on its potential upside and its reachable price target. Expectations for ARM are higher, but may be too high given the still-long wait for Windows 8.

Paul Ausick

Filed under: Analyst Calls, Industry, Semiconductor, Semiconductors, Technology, Technology Companies Tagged: AMD, ARMH, BRCM, INTC, QCOM

What’s Important in the Financial World (11/4/2011) MF Global Scandal, Groupon IPO, AMD Layoffs

Douglas A. McIntyre — Fri, 04 Nov 2011 10:32:35 +0000

The fate of Greece remains undetermined. Rumors are that Prime Minister George Papandreou will leave as part of a brokered agreement to get the opposition party to support austerity measures. There are also rumors that Greece may be expelled from the eurozone. This expulsion, which Greece would have to decide upon, would cause what was unimaginable just a week ago. Greece could stand alone, but such an action would trigger defaults on its debt, which would badly damage the balance sheets of some of the region’s largest banks. Greece also would become isolated as a trade partner, which would push it into a multiyear recession. So far, global stock markets have had only modest reactions to the turmoil. That could change radically if a bailout unwinds.

AMD layoffs. AMD (NYSE: AMD) said it would cut 10% of its workforce, which is 1,400 people. One of the troubling things about the decision is that AMD is a healthy company financially. It is another in a line of companies that do not absolutely have to cut costs but are doing so to improve margins. AMD’s low-end chip business has poor returns. The demand for PC chips continues to fall. So AMD acted prophylactically. More large American corporations are likely to do the same, as it is clear the economy has not made a quick turnaround.

Groupon raises IPO share price. Unexpectedly, Groupon (NASDAQ: GRPN) raised the price of shares for its IPO to $20, about $4 above the expected range. The company’s business model and losses have come under scrutiny by investors. Many analysts who follow companies that offer coupons online believe it will never be a highly profitable business. But, it is one Groupon will be able to stay in for a long time. The IPO will yield $700 million and value the company at $12.7 billion. The demand for the shares is a signal that investors continue to believe the largest Web 2.0 firms will grow at a rate similar to Google’s five years ago. For the Groupon valuation to be realistic, the company would have to become highly profitable as Google did.

Starubucks’ earnings are grande. Starbuck’s (NASDAQ: SBUX) earnings are a sign that the relatively well-to-do remain willing to pay $4 for fancy coffee drinks. Net income in the period that ended October 2 increased to $358.5 million, or $0.47 a share, from $278.9 million, or $0.37 in the same period a year ago. Starbucks said sales of its Via instant coffee had helped results. But, without strong demand at Starbucks retail outlets, earnings could not have been so strong. Same-store sales for the quarter were up 10%.

MF Global may have goosed balance sheet. The Wall Street Journal reports that MF Global may have dressed up its balance sheet for investors. The financial firm may have disguised debt and risky trading positions. If so, it will not be the only time a bank made “adjustments” to its balance sheet to appear more healthy than it actually was. MF Global CEO Jon Corzine, former head of Goldman Sachs (NYSE: GS), may be in greater trouble than was assumed when the small investment house filed for Chapter 11.

Douglas A. McIntyre

Filed under: Austerity, Banking, Bankruptcy, Brokerage Firms, Hardware, International Markets Tagged: AMD, GRPN, GS, SBUX

Why Monthly Unemployment Does Not Matter

247wallst — Fri, 04 Nov 2011 10:20:37 +0000

October unemployment figures will matter little, at least as far as the health of the economy. Job losses in 2009 ranged over 500,000 some months. More than 14 million Americans are unemployed, and over half of those have been out of work for more than 26 weeks. Those marginally attached to the workforce or who work part time while looking for full-time work number seven to eight million more.

The typical job growth per month, based on official federal figures, in the past six has been about 100,00o. This improvement still may be undermined by the public sector reductions. Austerity has taken part of its toll. The decisions by the congressional Super Committee could result in government cuts. State and municipal tax receipts remain at levels lower than they were in 2007.

The private sector’s employment picture does not look much better. Large companies continue to cut workers. AMD (NYSE: AMD), a relatively healthy company financially, just said it will fire 10% of its work force. And it wants to drop business lines that are not highly profitable. Corporations increasingly have sharpened knives to keep costs low. That should be no surprise. Many S&P 500 companies have forecast weak fourth-quarter earnings.

The Labor Department recently said national productivity rose at a 3.1% annual rate last quarter. Normally, this would cause a tightening of the workforce and employees could demand higher wages. It is more likely that businesses continue to get a better yield from people who cannot find other jobs. Productivity should be another word for “working harder for the same paycheck.”

Monthly unemployment numbers will not matter until the economy starts to add 300,000 or more people each month for several months. That is the only way economists can forecast that the jobless slump will reverse itself. That is the only way it will be evident that a significant portion of the 14 million people out of work have begun to find relief.

Douglas A. McIntyre

Filed under: General Tagged: AMD