Aixtron SE (NASDAQ: AIXG) Raised to Equalweight at Morgan Stanley.
Alcatel-Lucent SA (NYSE: ALU) Cut to Neutral at BofA/ML.
AstraZeneca PLC (NYSE: AZN) Cut to Underweight at Morgan Stanley.
Corrections Corporation of America (NYSE:CXW) named as Value stock of the day at Zacks.
Emerson Electric Co. (NYSE: EMR) Raised to Buy at Citigroup.
GlaxoSmithKline plc (NYSE: GSK) Raised to Equal-Weight at Morgan Stanley.
Honeywell International (NYSE: HON) Raised to Buy at Citigroup.
Humana Inc. (NYSE: HUM) Reiterated Buy and raised target to $95 at Argus.
Kirby Corporation (NYSE: KEX) Started as Outperform at Credit Suisse.
Microchip Technology (NASDAQ: MCHP) named as Bear of the Day at Zacks.
OmniVision Technologies Inc. (NASDAQ: OVTI) Cut to Perform at Oppenheimer.
Plains All American Pipeline, L.P. (NYSE: PAA) Raised to Outperform at Wells Fargo.
Rackspace Hosting, Inc. (NYSE: RAX) Raised to Buy at Kaufman Bros.
St. Jude Medical (NYSE: STJ) Raised to Outperform at Credit Suisse.
Teva Pharmaceutical Industries (NASDAQ: TEVA) Reinstated as Outperform at Credit Suisse.
Trimble Navigation Limited (NASDAQ: TRMB) Started as Buy at Janney.
Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) Cut to Neutral at R. W. Baird.
Whole Foods Market Inc. (NYSE: WFM) named Bull of the Day at Zacks.

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Citrix Systems Inc. (NASDAQ: CTXS) fell 10% after it announced it would buy Cloud.com. Analog Devices Inc (NASDAQ: ADI) fell 9% as other shares in its sector were punished by poor results

This is a much different list from our true tech-value stocks for the rest of this year.  We have identified how much these shares have dropped from their highs, but we have also looked at basic data concerning a forward P/E ratio for next year’s earnings and broken out the return on equity from Finviz.  When you look at the consensus analyst price target, the companies look even cheaper in most cases.  There is one caveat that has to be considered and that is that analysts will have to lower estimates through next week for the year ahead and that will of course change the valuations.  We are not looking for any immediate gains solely based on value.  The idea is to identify those situations where the drop has been enough and where the bad news may be close to priced in ahead of time.

Analog Devices Inc. (NYSE: ADI)  recently closed at $36.56, down 15% from its 52-week high; about 10% of that loss has been in recent days. The company has a forward price to earnings multiple of 12 and a 27% return on equity (ROE).  Analysts still have a consensus target north of $45.00 versus a 52-week high of $43.28.

Applied Materials Inc. (NASDAQ: AMAT) recently closed at $12.64, down 26% from its 52-week high. The company has a forward price to earnings multiple of 9.2 and a 20.5% return on equity (ROE). Analysts have a consensus target of about $15.75.  As the big daddy of chip cap-ex, the Novellus news hit here as well.  The forward estimates are almost always low for Applied, so there is no reason to jump the gun thinking that large earnings multiple expansion is heading this way.  In fact, value is often a value trap here in Applied Materials and in many cap-ex stocks in the sector.

Advanced Micro Devices, Inc. (NYSE: AMD) recently closed at $6.34, down 32% from its 52-week high. The company has a forward price to earnings multiple of 8.4 and a 61% return on equity (ROE).  The big problem with AMD remains relevance.  This is the turnaround that just never seems to really turn around.  The math has looked “cheap for a while” and the value trap argument seems to prevail.

Cirrus Logic Inc. (NASDAQ: CRUS) recently closed at $16.30, down well over 30% from its 52-week high and almost $10 shy of its $26.00 consensus analyst target. The company has a forward price to earnings multiple of 10 and a return on equity (ROE) of 62%.  With a $1.1 billion market cap, our biggest concern is that it is in the class of companies which could have “big hits and bad misses” when it comes to living up to earnings expectations.

Intel Corporation (NASDAQ: INTC) recently closed at $22.48, down just over 5% from its 52-week high. The company has a forward price to earnings multiple of 9.4 and a return on equity of 27%.  Intel has recently embarked on new initiative from tablets to security and to embedded systems.  Unfortunately, Intel falls into the same “tech utility” category and its nature is now entirely different from in the past.

SanDisk Corp. (NASDAQ: SNDK) recently closed at $41.18, down 23% from its 52-week high. The company has a forward price to earnings multiple of 8.4 and a 25% return on equity.  The reason SanDisk trades with a cheap multiple is because the company’s leadership in flash memory is subject to great swings throughout the business cycle.  Another issue is that when SanDisk is in the middle of its 52-week range like this it offers a technical no-man’s land.  This is one that may not be dirt cheap value nor a value trap.

Texas Instruments Inc. (NYSE:  TXN) recently closed at $31.00, down over 15% from its 52-week high. The company has a forward price to earnings multiple of 11.2 and a 31% return on equity.  With a large acquisition in the hopper, all we can do is consider the “value” on a standalone basis with serious caveats.

Xilinx Inc. (NASDAQ: XLNX) recently closed at $33.92 versus a 52-week high of $35.42, still well under 10% from highs.  The company has a forward price to earnings multiple of 14 and a 28% return on equity.  Unfortunately, this one just does not jump out in the screens other than its return on equity.

So, here are the comparable issues to consider.  Microchip Technology Inc. (NASDAQ: MCHP) is now down about 20% from its 52-week highs, while Novellus Systems, Inc. (NASDAQ: NVLS) was down more than 20% from its 52-week highs.  As you can see, some chip stocks named here are down a similar amount but others still have a way to go.  It is very possible that “value” in semiconductors may still be more of a value trap until things normalize.

The ETF that rules in chipland is the Semiconductor HOLDRs (NYSE: SMH).  With a price of $32.88, its 52-week trading range is $24.14 to $39.99.  An 11% discount from the 52-week high may entice some buyers, but there is still room to argue that this highly unbalanced ETF may not be close enough to “cheap” as of yet as Intel and Texas Instruments both have more than 20% of the weighting here.

Earnings season is upon us.

Jon Ogg & Jim Berdou

LDK Solar Co. Ltd. (NASDAQ: LDK) is down 4.5% premarket to $6.30, relative to a 52-week range of $5.73-$15.10. The company was one of several Chinese companies “red flagged” by Moody’s for questionable accounting practices and other issues.

Microchip Technology (NASDAQ: MCHP) is down nearly 10% premarket to $33.90, relative to a 52-week range of $27.46-$41.50. The company lowered its Q1 sales forecast.

Radiant Systems, Inc. (NASDAQ: RADS) is up more than 30% premarket to $28.00, relative to a 52-week range of $13.06-$23.03. The company was bought yesterday by NCR Corp for $1.2 billion. The company’s board of directors is also currently under investigation for breach of fiduciary duty.

Alcatel-Lucent (NYSE: ALU) Cut to Hold at Deutsche Bank.
American Water Works Co. (NYSE: AWK) Reiterated Buy at Gabelli.
Aqua America Inc (NYSE: WTR) Reiterated Buy at Gabelli.
China Unicom (NYSE: CHU) Cut to Neutral at Credit Suisse.
City National Corporation (NYSE: CYN) Raised to Neutral at BofA/ML.
Commerce Bancshares Inc. (NASDAQ: CBSH) Cut to Underperform at BofA/ML.
Federated Investors, Inc. (NYSE: FII) Cut to Underperform as Bear of the Day at Zacks.
HollyFrontier Corporation (NYSE: HFC) Cut to Neutral at BofA/ML; Started as Outperform at Oppenheimer.
M&T Bank Corp. (NYSE: MTB) Raised to Buy at BofA/ML.
Microchip Technology Inc. (NASDAQ: MCHP) Maintained Buy but cut target to $40 at Gleacher & Co.
Pegasystems Inc. (NASDAQ: PEGA) Cut to Hold at Canaccord Genuity.
SeaCube Container Leasing Limited (NYSE: BOX) reiterated Buy as Value at Zacks.
Sealed Air Corporation (NYSE: SEE) Raised to Overweight at Barclays.
Suncor Energy Inc. (NYSE: SU) named as Bull of the Day at Zacks.
Tesoro Corporation (NYSE: TSO) Cut to Underperform at BofA/ML.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Novellus Systems, Inc. (NASDAQ: NVLS), the chip equipment and cap-ex player, managed to beat earnings but revenues were soft as the sales were down about 15% to $350.2 million with earnings coming in at $0.79 EPS.  We had estimates from Thomson Reuters of $0.76 EPS and $352.3 million.  That is not such a bad miss on revenues in the current climate, but Novellus said that bookings were down some 25% from the first quarter at $312 million and shipments fell by about 5% to $376.9 million.  The company said that its customers remain cautious and it also expects bookings to continue to fall as PC shipments are soft.  Its guidance for the coming quarter is now $0.60 to $0.75 EPS on $300 to $340 million in revenues, but Thomson Reuters had estimates of $0.86 EPS and $359.7 million in revenues.  Novellus is only a $3.5 billion market cap and its shares are down 5.6% at $33.75 in the after-hours.  Here is how peers in chip cap-ex are being hit:

• KLA-Tencor Corporation (NASDAQ: KLAC) -3% at $40.99 in after-hours $7B market cap);
• Lam Research Corporation (NASDAQ: LRCX) -2.5% at $43.76 in after-hours ($5.5B market cap);
• Applied Materials Inc. (NASDAQ: AMAT) -0.5% at $12.90 indications ($17B market cap).

Microchip Technology Inc. (NASDAQ: MCHP) confessed after the close that its sales be about $373.3 million for the quarter, down about 1.5% sequentially and down from a prior forecast for a gain of 1% to 5% sequentially, as its sales activity did not progress as well as expected.  Non-GAAP earnings were put at $0.53 to $0.55 EPS rather  than the prior range of $0.58 to $0.62 EPS.  More importantly, the company is seeing a broad weakness due to auto businesses and due to an inventory correction after Japan’s quake and tsunami.  The company also cited a weaker global economic condition and less-robust computing sector sales. The company is now targeting the September quarter sales to be lower sequentially by the low- to mid-single digits.  Microchip Tech is a $7 billion market cap company and its shares are down by 7.4% at $34.70 in the after-hours.  Here is how some larger peers in chipland are holding up:

• Texas Instruments Inc. (NYSE: TXN) -1.6% at $31.90 ($37B market cap);
• Analog Devices Inc. (NYSE: ADI) -2.6% at $37.52 ($11.5 billion market cap).

On a broader note, the Semiconductor HOLDRs (NYSE: SMH) is down about 1.5% at $33.66 in the after-hours session and that is after a 1.4% drop in regular trading today.  Its 52-week range is $24.14 to $36.99.

These two companies today will not likely dominate earnings season entirely for technology and chip stocks, but they are early reporters and the comments may be interpreted in other aspects of tech as well.  Some of the larger companies may not be seeing the same news.  Still, these were the first reports for earnings season in the world of semiconductors and it is setting at least an overall cautious tone for the sector.

JON C. OGG

When Intel raised its dividend back in November of 2010, it was by 15%. This will have some ramifications for other chip stocks which have a high payout as well.  Dividends are generally not lowered, so a new dividend hike today is meant to be a signal that Intel will be able to both afford all of its future capital spending needs and will be able to have enough gross income left over to pay this dividend and even to repurchase shares of its common stock for the foreseeable future.

Even after a more than 2% gain to $23.50 today, Intel’s new dividend yield will jump up to 3.55% on an annualized basis.  We want to compare this dividend today to that of Microsoft Corporation (NASDAQ: MSFT), Maxim Integrated Products Inc. (NASDAQ: MXIM), Intersil Corporation (NASDAQ: ISIL), Microchip Technology Inc. (NASDAQ: MCHP), and even for Digital Realty Trust Inc. (NYSE: DLR).

Microsoft Corporation (NASDAQ: MSFT) currently pays 2.50%.  With the $8.5 billion cash acquisition of Skype, we would not be looking for a massive hike to its payout.  We also now believe that Microsoft may choose to make acquisitions rather than to opt for that rumored huge one-time dividend.

Maxim Integrated Products Inc. (NASDAQ: MXIM) has a dividend yield of 3.00% dividend yield, Intersil Corporation (NASDAQ: ISIL) pays a 3.1% dividend yield, and Microchip Technology Inc. (NASDAQ: MCHP) pays a 3.4% dividend yield. These were all higher yields in prior reference but that is because shares have appreciated after earnings season now.

Xilinx Inc. (NASDAQ: XLNX) already took its $0.16 per share per quarter dividend up to $0.19 per share per quarter.  The annualized payout comes to $0.76 and shares have risen to $35.75 since its dividend hike reaction when shares trading at $32.10.  That yield then was 2.35% but now it is only about 2.1%.

Perhaps the best of the best dividend is in technology’s landlord of the cloud and the internet.  This is seen in the real-estate investment trust of Digital Realty Trust Inc. (NYSE: DLR).  The REIT is far from a chip company but it is a meant to represent a pure-play on renting office space to software, information technology, real technology, and data center companies.  Its yield at the most recent $0.68 per quarter or $2.72 per year would be about 4.45% based upon a $61.00 share price.  When we highlighted this REIT in mid-February, the share price was around $55.80.

JON C. OGG

Xilinx took its $0.16 per share per quarter dividend up to $0.19 per share per quarter this morning.  The annualized payout comes to $0.76 and with a share price of $32.10 it generates a dividend yield for investors of about 2.35%.  That might not sound like much on the surface but it is a high-yield for a technology stock.  This may actually put the heat on Altera Corporation (NASDAQ: ALTR) as the company’s closest similar company due to its paltry 0.6% dividend yield. What is interesting is that Altera is up considerably more than Xilinx over the last one-year and six-months, but not over the last quarter. 

Some other chip stocks with relatively high dividends are as follows:

Intel Corporation (NASDAQ: INTC) actually has a 3.5% dividend yield.

Maxim Integrated Products Inc. (NASDAQ: MXIM) pays a 3.3% dividend yield

Intersil Corporation (NASDAQ: ISIL) pays a 4.1% dividend yield

Microchip Technology Inc. (NASDAQ: MCHP) pays a 3.9% dividend yield.

The biggest dividend and perhaps safest dividend of all in technology is one that many have sort of overlooked as it is technically ‘technology’s landlord’ in the form of a REIT.  Digital Realty Trust, Inc. (NYSE: DLR) currently pays a 4.8% dividend yield.

Most investors think that they cannot find high dividend yields in technology.  That is still mostly true, but not in semiconductor-related businesses.

JON C. OGG

The REIT pays roughly a 3.9% dividend yield.  At $55.80, its 52-week range is $47.42 to $64.17 and it has a market cap of right about $5 billion.  Throughout the recession, Digital Realty (or Digital REIT by our abbreviation) has managed to grow the dividend.  The current rate has been $0.53 per quarter.  Thomson Reuters has estimates of $3.29 looking back at 2010 and $3.85 EPS for 2011.  As a REIT, it pays out 90% of income to owners. Analysts have a consensus price target of $62.35.

The company claims to have the world’s largest wholesale data centers.  Companies range from large technology companies to financial providers who need their technology managed.  It operates more than 95 properties consisting of 16.7 million rentable square feet throughout America, Europe, and the Pacific Rim.

The higher yields out there in technology are still low compared to utilities and what used to be paid out in banks and financials before the credit crunch.  A few other technology companies with relatively high dividends are Maxim Integrated Products Inc. (NASDAQ: MXIM) with a 3.2% yield, Intersil Corporation (NASDAQ: ISIL) has a yield of roughly 3.6%, Microchip Technology Inc. (NASDAQ: MCHP) pays a dividend of roughly 3.7% and that has been increased through time.

There is income if you go much larger up the ladder as well.  Intel Corporation (NASDAQ: INTC) also generates billions in free cash and investors can reach up to get a yield of 3.3% at the current price.  Microsoft Corporation (NASDAQ: MSFT) generates billions and billions in cash and pays roughly a 2.3% yield.  Unfortunately, those investments have generated very little in long-term capital gains over the last decade.  Unfortunately, it has been a tough sell telling investors that these are income stocks.

JON C. OGG

Baidu.com (NASDAQ: BIDU) Started as Buy at Deutsche Bank.
Cerner (NASDAQ: CERN) Cut to Hold at Auriga.
Cliffs Natural Resources (NYSE: CLF) Raised to Outperform at FBR.
Deere (NYSE: DE) Started as Buy at Jefferies.
eDiets (NASDAQ: DIET) Cut to Hold at Canaccord.
LDK Solar (NYSE: LDK) Cut to EqualWeight at Morgan Stanley.
Marvell Tech (NASDAQ: MRVL) Started as BUy at Deutsche Bank.
Microchip Tech (NASDAQ: MCHP) Raised to Overweight at Thomas Weisel.
Novo Nodisk (NYSE: NVO) Raised to Hold at Citigroup.
U-Sture-It Trust (NYSE: YSI) Raised to Outperform at Baird.

Jon C. Ogg
March 24, 2009