24/7 Wall St. » NVDA

After The Fall: Value & Upside In Chip Stocks As Summer Heat Awaits (INTC, QCOM, BRCM, NVDA, AMD, TSM, MU, FSL, SNDK, AMAT, ALTR, LRCX, SMH, XSD, USD)

Administrator — Thu, 24 May 2012 15:51:47 +0000

The recent sell-off has been brutal to semiconductors and chip stocks of late. To make matters worse, investing in technology and semiconductors can be brutal during the summer months. Still, many investors believe that where there is risk there is also reward and trying to nail an exact bottom is no easy task.

With warnings having started from key leaders in the realm of chip stocks, the question is whether or not you can trust the analysts and the consensus upside. 24/7 Wall St. has gone in and evaluated the leaders in each aspect of the semiconductor sector to see where there is value and where the risks currently lie. We evaluated the following chip companies: Intel Corporation (NASDAQ: INTC); QUALCOMM Incorporated (NASDAQ: QCOM); Texas Instruments Inc. (NASDAQ: TXN); Broadcom Corp. (NASDAQ: BRCM); NVIDIA Corporation (NASDAQ: NVDA); Advanced Micro Devices, Inc. (NYSE: AMD); Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM); Freescale Semiconductor Holdings (NYSE: FSL); SanDisk Corporation (NASDAQ: SNDK); Applied Materials Inc. (NASDAQ: AMAT); Lam Research Corporation (NASDAQ: LRCX); and Altera Corporation (NASDAQ: ALTR).

In a further effort to show just how much these have sold off, we have shown the moves in the following key semiconductor ETFs: Market Vectors Semiconductor ETF (AMEX: SMH); SPDR S&P Semiconductor (AMEX: XSD); and the ProShares Ultra Semiconductors (AMEX: USD). We have also run the same screens in retail, gold and silver miners, conglomerates, industrial giants, and major oil companies with links to those at the end of this article. Here is the screening of value and upside in the chip giants:

Intel Corporation (NASDAQ: INTC) traded at $26.60 with a market value of $129 billion. The consensus target price for the king of PC processors from Thomson Reuters is $29.75 and the 52-week trading range is $19.16 to $29.27. This DJIA component’s most recent yield was listed as 3.2%. Intel’s implied upside to the consensus target is 16% and it is worth noting that the consensus target is just above the 52-week high.

QUALCOMM Incorporated (NASDAQ: QCOM) traded at $57.78 with a market value of $99 billion. The consensus target price from Thomson Reuters is $71.92 and the 52-week trading range is $45.98 to $68.87. The CDMA giant yields about 1.7% after dividend hikes. The implied upside to the consensus target is just under 25% but we would note that the consensus target is still over $3.00 above the 52-week high.

Texas Instruments Inc. (NASDAQ: TXN) traded at $29.15 with a market value of $33.4 billion. The consensus target price from Thomson Reuters is $35.80 and the 52-week trading range is $24.34 to $35.30. The yield here is about 2.3%. TI’s implied upside to the consensus target is just under 23% and that target is still just above its 52-week high.

Broadcom Corp. (NASDAQ: BRCM) traded at $31.85 with a market value of $17.5 billion. The consensus target price from Thomson Reuters is $43.21 and the 52-week trading range is $27.59 to $39.66. Broadcom has a paltry yield of only about 1.2%, but its implied upside to the consensus target is about 35%. Be advised that this consensus target is almost $4.00 above the 52-week high.

NVIDIA Corporation (NASDAQ: NVDA) trades at $12.25 and its market cap is just over $7.5 billion. This graphics processor leader has a consensus target price of $16.64 and the 52-week trading range is $11.47 to $20.05. NVIDIA pays no dividend and that is something which it should consider changing since it has about $3 billion in cash and liquidity. Its implied upside to the consensus target is about 35% and that consensus target price is well under its 52-week high.

Advanced Micro Devices, Inc. (NYSE: AMD) trades at $6.06 and its market cap is only $4.25 billion despite it being so actively traded. The consensus target price for this distant number-2 in PC processors is $8.55 and the 52-week trading range is $4.31 to $8.71. AMD has no dividend due to very spotty earnings. Its implied upside to the consensus target is more than 41% if you trust the analysts here and its target price is just under its 52-week high.

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) currently trades at $14.15 for its ADR and Yahoo! Finance shows its market value being about $73 billion. The consensus target price from Thomson Reuters is $16.70 and the 52-week trading range is $10.75 to $16.15. The yield is listed as roughly 2.9%. TSM’s implied upside to the consensus target is 18% and the consensus target is about 4% above the 52-week high.

Freescale Semiconductor Holdings (NYSE: FSL) has been battered since its IPO and shares now trade at $9.75 with an implied market value of $2.4 billion. This private equity backed chip outfit’s consensus target price from Thomson Reuters is all the way up at $17.92 and the 52-week (less than one-year actually) trading range is $9.43 to $20.97. Freescale has NO DIVIDEND, which makes it stand out against the peer group now. Still, if you trust the analysts here the implied upside to the consensus target is a whopping 83%! Trust is hard to come by here, particularly for a company where backers will sell shares along the way into strength.

SanDisk Corporation (NASDAQ: SNDK) trades around $32.50 and its market value is about $7.9 billion. The king of flash memory’s consensus target price from Thomson Reuters is $44.46 and the 52-week trading range is $31.34 to $53.46. SanDisk has no current dividend, something which may need to change down the road considering that this is not anywhere close to a new company. Its implied upside to the consensus target is 37% but the company has had two warnings.

Applied Materials Inc. (NASDAQ: AMAT) currently trades at $10.55 and its market value is $13.6 billion. The consensus target price from Thomson Reuters is $13.65 and the 52-week trading range is $9.70 to $13.94. Applied now yields about 3.4% and its implied upside to the consensus target is about 29%.

Lam Research Corporation (NASDAQ: LRCX) is worth more than $4.5 billion today but it is acquiring Novellus Systems, Inc. (NASDAQ: NVLS) for about $3 billion in stock, so it will soon be larger. Its shares trade at $38.00, its consensus target price is $48.53 and the 52-week trading range is $34.81 to $48.88. Lam Research pays NO DIVIDEND now and its implied upside is almost 28%.

Altera Corporation (NASDAQ: ALTR) currently trades at $33.90 and its market value is $10.9 billion. The consensus target price from Thomson Reuters is $41.00 and the 52-week trading range is $30.39 to $48.91. Altera has a dink yield of only about 1% and we expect a dividend hike in the coming weeks or months. Its implied upside to the consensus target is about 21% and this one is well off highs and the target is almost $8.00 under its 52-week high.

Market Vectors Semiconductor ETF (AMEX: SMH) has undergone a total transformation since it is no longer the Semiconductor HOLDRs. At $31.25 its range since the change is listed as $28.86 to $36.17. This ETF is said to have assets of almost $400 million, but that changes based upon inflows and outflows on top of the change in the price.

SPDR S&P Semiconductor (AMEX: XSD) ETS is now one of the longest ETF in chips since the HOLDRS changed. At $43.50 now, its 52-week range is $40.09 to $59.85 and it still has only about $44 million in assets. This one peaked in January and the mix of components has made it more volatile than many leaders. This ETF would now have to rally by more than 37% to hit its 52-week high again.

ProShares Ultra Semiconductors (AMEX: USD) uses leverage of 2-times for its semiconductor trading, so this is one where it will feel just like getting your fingernails ripped out when your timing is wrong. At $33.50, this leveraged ETF has a 52-week range of $26.18 to $46.46. It would have to rally about 39% to hit its 52-week high again.

As you can see, the semiconductor and chip leaders have now pulled back substantially from their highs seen throughout 2012. The issue to consider is that Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ) have confirmed that PC sales are slowing. Some of this is due to Apple Inc. (NASDAQ: AAPL) and some of it is due to weakness in Europe, weak PC spending in the Americas, and a slowing of growth in the BRIC nations. How the Microsoft Corporation (NASDAQ: MSFT) launch of Windows 8 will impact the PC refresh cycle ahead is now another wild card since PC sales guidance is looking softer than anticipated from just a couple of weeks ago.

We also want to warn investors to not just blindly trust the analysts in semiconductor price targets here. Summer can be a brutal time for chip stocks. The drop in the ProShares Ultra Semiconductors (AMEX: USD) during the summer of 2011 was about 40% and the drop from the 52-week high in 2011 to that end of summer trough was almost 50%.

The drop in the SPDR S&P Semiconductor ETF (AMEX: XSD) during the summer of 2011 was about 25%, but the drop from the peak in early 2011 here to the trough of late-summer was about 31%.

Summer is a very tough time to invest in chip stocks, and the question now is just how much the slowdown is going to continue taking out of chip stocks. We would certainly avoid trying to play the game of trying to catch falling knives here, but these are all worth keeping an eye on for those inflection points where the valuations start to adequately discount the warning signs.

Gold & Silver Miners with the Most Upside Value

Major Oil Companies with the Most Upside Value

Industrials with the Most Upside Value

Conglomerates with the Most Upside Value

Retail Stocks with Upside

JON C. OGG

Filed under: Consumer Electronics, Dividend, PC Companies, Semiconductor, Technology Companies, Value Investing Tagged: ALTR, AMAT, AMD, BRCM, DELL, FSL, HPQ, INTC, LRCX, MU, NVDA, QCOM, SMH, SNDK, TSM, USD, XSD

Media Digest (5/16/2012) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Wed, 16 May 2012 10:28:37 +0000

The number of shares Facebook will sell rose 25% and the company could raise as much as $16 billion. (Reuters)

Greeks take hundreds of millions of dollars out of banks there and the government calls national elections. (Reuters)

Shares of JCPenney (NYSE: JCP) fall sharply after it announces poor earnings. (Reuters)

BHP Billiton (NYSE: BHP) says commodities prices will drop more than they have in the past month. (Reuters)

T-Mobile USA will cut 900 jobs as its subscriber count falls. (Reuters)

General Motors (NYSE: GM) will stop advertising on Facebook because of poor results. (Reuters)

Global mobile phone sales drop 2% in the first quarter, according to Gartner. (Reuters)

Activist fund Relational Investors takes a $600 million stake in PepsiCo (NYSE: PEP) and may press to shake up management and strategy. (WSJ)

Nvidia (NASDAQ: NVDA) begins to move graphics functions from PCs to the cloud. (WSJ)

Amazon.com (NASDAQ: AMZN) sharply increases the size of its work force. (WSJ)

House Speaker John Boehner says an increase in the national borrowing level would need to be accompanied by budget cuts. (WSJ)

Two of seven transport workers unions reject contract offers from bankrupt AMR, leaving a judge to decide their fates. (WSJ)

The FBI begins investigating the trading at JP Morgan (NYSE: JPM) that created a $2 billion loss. (NYT)

As consumers move away from soda, PepsiCo and Coca-Cola (NYSE: KO) must rely more on bottled water sales. (NYT)

Merkel and Hollande say they want Greece to remain in the eurozone and state that stimulus measures might be in order. (FT)

European car sales fall more than 6% in April, according to the European Automobile Manufacturers’ Association. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AMZN, BHP, GM, JCP, JPM, KO, NVDA, PEP

Media Digest (5/15/2012) Reuters, WSJ, FT, Bloomberg

247wallst — Tue, 15 May 2012 10:25:41 +0000

The president of Greece cannot create a coalition government. (Reuters)

Sony (NYSE: SNE) and Panasonic may force a partnership to build OLED TVs. (Reuters)

Trouble at Chesapeake Energy (NYSE: CHK) may prompt low-ball bids for many of the its assets. (Reuters)

New data from the government will show the extent to which people over 55 cannot find jobs. (Reuters)

Coty withdraws its $10.7 billion offer for Avon (NYSE: AVP). (Reuters)

Facebook raises the target of its IPO to $34 to $38, which could push a valuation as high as $106 billion. (WSJ)

LightSquared files for Chapter 11. (WSJ)

The chairman of Best Buy (NYSE: BBY) steps down over governance violations. (WSJ)

Investors are upset that Chesapeake had to take a $3 billion loan. (WSJ)

Baidu (NASDAQ: BIDU) to offer a low-cost smartphone. (WSJ)

Eurostat says EU industrial production fell in the March. (WSJ)

California governor Jerry Brown shows a series of planned cuts as projections for the state’s deficit rise to $15.7 billion. (WSJ)

Nvidia (NASDAQ: NVDA) and Intellectual Ventures buy 500 patents as the chip maker girds for patent wars. (WSJ)

JCPenney (NYSE: JCP) CEO Ron Johnson may be unable to work the same magic he did at Apple (NASDAQ: AAPL) stores. (WSJ)

JP Morgan (NYSE: JPM) CEO Jamie Dimon encourages a culture of risk at the bank. (WSJ)

Facebook still faces the question of how well it can do with smartphones. (FT)

Some EU officials would like to see eased terms of Greece’s austerity commitments. (Bloomberg)

A chip supply shortage could hurt smartphone sales. (Bloomberg)

Apple may launch a thin laptop powered by Intel (NASDAQ: INTC) chips. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, AVP, BBY, BIDU, CHK, INTC, JCP, JPM, NVDA, SNE

Markets Hammered As Major Stocks Falter

247wallst — Mon, 14 May 2012 14:01:15 +0000

The DJIA is off over 100 points, 136 points, to 12,686. The NASDAQ and S&P 500 are off by similar percentages.

The carnage is particularly severe in a few sectors.

News that JP Morgan (NYSE: JPM) fired its chief investment officer reminded investors of how badly risk is managed at large banks. JPM has taken a $2 billion write-off its London traders took. JPM is down 2.81% to $35.90.Back of America (NYSE: BAC) is down 2% on similar sentiment about risk to $7.39, and Citigroup (NYSE: C) is down 2%. Morgan Stanley (NYSE: MS) is down 3.4%. Its debt will probably be downgraded this summer, according to a number of sources.

Several tech stock were hurt by worry of a slowing economy in Europe, and perhaps Asia. These include Symantac (NASDAQ: SYMC), Micron (NASDAQ: MU), Clearwire (NASDAQ: CLWR), and Nvidia (NASDAQ: NVDA). The sell off in Clearwire is more because of debt than overseas exposure.

Yahoo! (NASDAQ: YHOO) is only up 1.4% on news it sacked and replaced its CEO. Markets probably assume that its trouble goes well beyond a replacement of management. Best Buy (NYSE: BBY) fired its chairman and founder because he helped cover-up a relationship the electronics firm’s CEO has with another employee. Best Buy shares are up less than 1%

Douglas A. McIntyre

Filed under: Index Tagged: BAC, BBY, C, CLWR, JPM, MS, MU, NVDA, SYMC, YHOO

24/7 Wall St. Closing Bell

Paul Ausick — Fri, 11 May 2012 20:05:14 +0000

The major US stock indexes opened significantly lower this morning as investors reacted to the surprise loss of $2 billion by JPMorgan Chase & Co. (NYSE: JPM) disclosed by the bank’s CEO after trading closed last night (more coverage here and on the 24/7 Wall St. Wire). A drop in the producer price index (coverage here) and a rise in consumer sentiment (coverage here) put some air back into equities, particularly in the tech sector. Only the Nasdaq has been able to show a positive gain today, with about an hour left to closing, but the other two major indexes are down only fractionally. The US dollar index rose today, now up 0.20% at 80.272. The GSCI commodity index is down about 0.1% at 647.50, with commodities mostly lower today on the stronger dollar. Soybeans and canola were the big losers. WTI crude oil closed down -1% at $96.13/barrel and Brent crude trades down -0.54% at $112.12/barrel. Gold settled down -0.7% today, at $1,584.00/ounce, down 4% for the week.

The unofficial closing bells put the DJIA down more than 34 points to 12,820.53 (-0.27%), the NASDAQ rose less than 1 point (0.01%) to 2,933.82, and the S&P 500 fell -0.34% or nearly 5 points to 1,353.38.

There were several analyst upgrades and downgrades today, including Apple Inc. (NASDAQ: AAPL) maintained ‘outperform’ but estimates cut at Credit Suisse (more coverage here); AT&T Inc. (NYSE: T) raised to ‘outperform’ at Credit Suisse; Best Buy Co. Inc. (NYSE: BBY) cut to ‘neutral’ with a target price of $20 at Credit Suisse; Verizon Communications Inc. (NYSE: VZ) raised to ‘outperform’ at Credit Suisse; and Arena Pharmaceuticals Inc. (NASDAQ: ARNA) raised to ‘buy’ at Jefferies and to ‘outperform’ at Leerink Swann.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Dillard’s Inc. (NYSE: DDS) is up 7.3% at $70.99 after posting a new 52-week high of $72.47 earlier today (more coverage here); ReneSola Ltd. (NYSE: SOL) is up 5.6% at $1.89 (more coverage here); Nvidia Corp. (NASDAQ: NVDA) is up 6.9% at $13.28 (more coverage here); and Uranium Resources Inc. (NASDAQ: URRE) is down -2.4% at $0.80.

On Monday we are scheduled to get earnings from Groupon Inc. (NASDAQ: GRPN), InterOil Corp. (NYSE: IOC), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), Kior Corp. (NASDAQ: KIOR), and Silver Wheaton Corp. (NYSE: SLW).

Other standouts from today include the following stocks:

A number of ETFs had reverse splits of 1-for-5 today, and showed gains of 400% as a result. These included the ProShares UltraPro Short S&P500 (AMEX: SPXU) and other ProShares funds.

Arena Pharmaceuticals is up 76.2% at $6.45 after posting a new 52-week high of $7.01 earlier today. The drug maker received FDA approval to sell its lorcaserin diet drug in the US. Orexigen Therapeutics Inc. (NASDAQ: OREX) and Vivus Inc. (NASDAQ: VVUS) also have similar drugs in development and posted nice gains today as well.

Chesapeake Energy Corp. (NYSE: CHK) is down -10.7% at $15.35 after posting a new 52-week low of $15.21 earlier today. The company filed is proxy statement with the SEC today and it’s a doozy. More coverage here.

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

11:30 a.m. – 3- and 6-month bill auction

Have a great weekend!

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AAPL, ARNA, BBY, CHK, DDS, GRPN, IOC, JASO, JPM, KIOR, NVDA, OREX, SLW, SOL, SPXU, T, URRE, VVUS, VZ

Nvidia Jumps on Results, Forecast (NVDA, ARMH, QCOM, AAPL, TXN, MSFT, INTC, AMD)

Paul Ausick — Fri, 11 May 2012 13:04:15 +0000

Chip maker Nvidia Corp. (NASDAQ: NVDA) handily beat consensus estimates for first quarter revenues and EPS the company reported this morning. Revenue totaled $924.9 million compared with an estimate of $916.2 million and adjusted EPS came in at $0.16 versus an estimate of $0.10.

The company’s CEO could barely contain his enthusiasm:

Kepler GPUs [graphics processing units] are accelerating our business. Our newly launched desktop products are winning some of the best reviews we’ve ever had. Notebook GPUs had a record quarter. And Tegra is on a growth track again, driven by great mobile device wins and the upcoming Windows on ARM launch.

Nvidia, which licenses designs from ARM Holdings plc (NASDAQ: ARMH), may be getting back on track following a couple of weak quarters. Like other ARM licensees such as Qualcomm Corp. (NASDAQ: QCOM), Apple Inc. (NASDAQ: AAPL), and Texas Instruments Inc. (NASDAQ: TXN), Nvidia is profiting from the explosive demand for mobile devices like smartphones and tablets.

The company’s growth prospects are further enhanced by a decision from Microsoft Corp. (NASDAQ: MSFT) to release a version of is Windows 8 operating system for ARM-based processors, the company’s first foray from the x86-designs of Intel Corp. (NASDAQ: INTC) and Advanced Micro Devices Inc. (NYSE: AMD).

Nvidia forecast second quarter revenue of $990 million to $1.05 billion, significantly above the current consensus estimate of $976.2 million. Non-GAAP gross margins are also expected to rise from 50.1% in the first quarter to 51.5% in the second quarter.

The company’s share price is down about -45% since the beginning of 2011. Nvidia’s forward P/E ratio in February of 2011 was north of 63. That has fallen to 13.65 today, indicating an abundance of enthusiasm from investors that the company simply couldn’t deliver on. The situation is changing now, and Nvidia might actually be set to deliver the goods.

Shares are up 9.5% in the pre-market this morning, at $13.58 in a 52-week range of $11.47-$20.52.

Paul Ausick

Filed under: Consumer Electronics, Earnings, Industry, Pre-Market Activity, Semiconductor, Semiconductors, Technology Tagged: AAPL, AMD, ARMH, featured, INTC, MSFT, NVDA, QCOM, TXN

Mobile Chip Maker’s Results Don’t Impress Investors (ARMH, AAPL, QCOM, NVDA, TXN, INTC)

Paul Ausick — Tue, 24 Apr 2012 11:47:16 +0000

UK-based chip designer ARM Holdings PLC (NASDAQ: ARMH) reported earnings earlier today, posting revenue of about $209.4 million, well above estimates of $201.23 million, but below revenues of $217 million in the fourth quarter of 2011. Earnings per ADS totaled $0.13, a penny below the consensus estimate, and it is that miss that is weighing on the share price in the pre-market this morning.

ARMH has other complications as well. The company’s designs are used in a variety of mobile devices, including iPhones and iPads from Apple Inc. (NASDAQ: AAPL) which uses chips manufactured by Qualcomm Corp. (NASDAQ: QCOM). Nvidia Corp. (NASDAQ: NVDA) and Texas Instruments Inc. (NASDAQ: TXN) also use ARM designs. The world’s biggest chip maker, Intel Corp. (NASDAQ: INTC), has not been a major force in the mobile device market, but that is about to change.

Intel launched its ‘Ivy Bridge’ processor family yesterday. The chip uses less power while still offering more computing punch. A version of the chip is scheduled to be released before summer, and that could have an impact on ARM’s business.

And what a business it is. Gross margins for the quarter were 94.4%, the same as they were in the same period a year ago. In the fourth quarter of 2011, gross margins were even higher — 96%.

For the full fiscal year, ARM said it expects “dollar revenues for the full-year 2012 will be in line with current market expectations.” The consensus estimate is $885.2 million.

Given that ARM’s quarterly performance can be characterized as merely ‘okay,’ that the company missed the consensus earnings estimate, that Intel is about to go after ARM’s main market, and that the company’s outlook remains unchanged, it’s no surprise that in the pre-market this morning, ARM ADSes are down more than -3% at $26.70 in a 52-week range of $22.10-$32.18.

Paul Ausick

Filed under: Consumer Electronics, Earnings, Industry, Semiconductors, Technology, Telecom Tagged: AAPL, ARMH, INTC, NVDA, QCOM, TXN

Sandisk Weakness Hits Other Chip, Flash Makers (SNDK, MU, BRCM, NVDA, QCOM, AAPL)

Paul Ausick — Fri, 20 Apr 2012 16:03:50 +0000

Sandisk Corp. (NASDAQ: SNDK) had already guided its quarterly earnings down, but last night’s report also lowered the company’s forecast by about $250 million (our coverage here). That is likely the cause of the drooping prices for Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), and Nvidia Corp. (NASDAQ: NVDA). Only Qualcomm Inc. (NASDAQ: QCOM) is managing to avoid a hit today.

Micron’s shares are down about -4.2% at $6.71 in a 52-week range of $3.97-$11.83. Micron’s NAND Flash memory business was expected to get a boost from the release of Ultrabook laptop computers from a number of makers later this year. Sandisk, too, was expecting some help from the Ultrabook releases, but the company’s guidance put a halt to that.

Broadcom and Nvidia are also feeling the effects of Sandisk’s earnings report, but not to the same degree as Micron. Broadcom’s shares are down 1.4% at $35.23 in a 52-week range of $27.59-$41.00, and Nvidia’s shares are off -0.4% at $13.60 in a 52-week range of $11.47-$20.52.

Only Qualcomm is dodging Sandisk’s bullet, up nearly 1% at $63.16 in a 52-week range of $45.98-$68.87. The company is simply better positioned in the mobile device market than any of the others, primarily because of its role as a supplier to Apple Inc. (NASDAQ: AAPL).

Paul Ausick

Filed under: Consumer Electronics, Industry, Semiconductors, Technology, Wireless Tagged: AAPL, BRCM, MU, NVDA, QCOM, SNDK

Google’s Failed Due Diligence on Android

247wallst — Mon, 16 Apr 2012 10:35:26 +0000

Google (NASDAQ: GOOG) released its open source operating system in September 2008. It is too bad Google’s patent counsel did not look more carefully at whether the software violated patents and the copyrights of other companies. It probably will cost Google hundreds of millions of dollars. It already has cost firms that use the software extraordinary sums. Google’s carelessness will be remembered as one of the great legal blunders of the current generation of tech.

The Open Handset Alliance included a number of companies, led by Intel (NASDAQ: INTC), Nvidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM) and Sprint Nextel (NYSE: S), and Samsung was a supporter of the alliance. Its members almost certainly were tired of paying royalties for operating systems like Symbian, and possibly what has become the Apple (NASDAQ: AAPL) iOS. The earliest project of the Open Handset Alliance was the Android Open Source Project. When it was released, the group’s proponents said, “The goal of the Android Open Source Project is to create a successful real-world product that improves the mobile experience for end users.”

One of the earliest, and most successful to date, challenges to Android’s intellectual property came from Microsoft (NASDAQ: MSFT). This was ironic because Microsoft had no success with adoption of its own Windows Mobile software. Microsoft was able to get license fees from Samsung and HTC, two of the largest handset makers. A Goldman Sachs (NYSE: GS) report predicted that Microsoft could collect over $400 million on these patents a year. And Microsoft may still challenge the use of Android by several other smartphone firms.

Google’s rights to some portions of the Android OS have also been challenged by Oracle (NASDAQ: ORCL). Oracle claims parts of the open operating system violate its patents and copyrights, which are part of its ownership of Java. Oracle wants $1 billion as part of the action, and it also may get a license fee per any device that uses Android.

Android has been an extraordinary success, except on the legal front. Research firm IDC expects that almost 40% of new smartphones made worldwide will be powered by Android this year. IDC reports that Apple’s iOS will be only half of that, even with the stunning success of the iPhone.

The argument could be made that Android was rushed to market as Google tried to challenge other mobile systems. Google wanted a wedge to move its search products from PCs to handsets. Open source Android seemed the perfect vehicle. Google bought Android in 2005. Three years later, the software was deployed.

There were a enough PC and mobile systems introduced before Android that it was fair to predict that Android would not be without legal challenges. The IP attorneys at Google must have believed that Google could weather patent lawsuits, because the claims of previous patents would be small and easy to defend. It turned out that they were wrong. And that mistake becomes more costly by the day.

Douglas A. McIntyre

Filed under: Law, Software Tagged: AAPL, GOOG, GS, INTC, MSFT, NVDA, ORCL, QCOM, S

24/7 Wall St. Closing Bell (JCP, AMSC, EGO, NVDA, M, HCSG, PGR, ADTN, MSW, FAST, RAD, MFRM, TITN, DVR, NOK)

Paul Ausick — Wed, 11 Apr 2012 20:03:36 +0000

Markets opened higher this morning following the pleasant surprise earnings report from Alcoa Inc. (NYSE: AA) after markets closed yesterday (our coverage here). The report on US crude oil inventories showed a relatively modest gain this week, boosting crude prices (our coverage here). Based on better expectations for quarterly earnings and mildly better news on the global economy, investors took on more risk today, driving up Treasury yields in the bargain. The US dollar index fell slightly today, now down -0.09% at 79.788. The GSCI commodity index is down about -1.5% at 674.42, with orange juice again leading the decliners. WTI crude oil closed up 1.7% at $102.70/barrel, and Brent crude trades up 0.12% at $120.02/barrel. Gold settled down just -$0.40 today, at $1,660.30/ounce.

The unofficial closing bells put the DJIA up more than 90 points to 12,806.15 (0.71%), the NASDAQ rose more than 25 points (0.84%) to 3,016.46, and the S&P 500 rose 0.75% or more than 10 points to 1,368.79.

There were several analyst upgrades and downgrades today, including J.C. Penney & Co. (NYSE: JCP) started as ‘neutral’ at UBS; American Superconductor Corp. (NASDAQ: AMSC) started as ‘buy’ at Maxim Group; Eldorado Gold Corp. (NYSE: EGO) raised to ‘buy’ at Canaccord Genuity; Nvidia Corp. (NASDAQ: NVDA) started as ‘outperform’ at RBC; and Macy’s Inc. (NYSE: M) started as ‘neutral’ at UBS.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Alcoa is up 6.2% at $9.90; Health Care Services Group Inc. (NASDAQ: HCSG) is up 7.2% at $21.47; Progressive Corp. (NYSE: PGR) is down -0.6% at $22.61; and Adtran Inc. (NASDAQ: ADTN) is up 7.5% at $30.61. After the markets close today we will hear from Mission West Properties Inc. (NASDAQ: MSW) among others. Before the markets open tomorrow morning we get earnings from Fastenal Corp. (NASDAQ: FAST) and Rite Aid Corp. (NYSE: RAD).

Other standouts from today include the following stocks:

Mattress Firm Holding Co. (NASDAQ: MFRM) is up more than 17% at $43.89 after posting a new 52-week high of $45.42 earlier today. The retailing company posted good earnings and announced an acquisition. More coverage here.

Titan Machinery Inc. (NASDAQ: TITN) is up more than 17% at $32.20 after posting a new 52-week high of $33.35. The farm machinery company shattered earnings expectations.

Cal Div International Inc. (NYSE: DVR) is up more than 13% at 3.71. The offshore oil field services firm has announced that it will be a 40% partner in the Cape Wind project offshore of Massachusetts.

Nokia Corp. (NYSE: NOK) is down more than -16% at $4.21, a new 52-week low. The cell phone maker warned on earnings this morning and is fixing a glitch in its new Lumia 900 phone. Even more coverage here.

Stay tuned for Wednesday. New York Fed President William Dudley, Philadelphia Fed President Charles Plosser, Minneapolis Fed President Naryana Kocherlakota, and Federal Reserve governor Sarah Bloom Raskin are all giving speeches. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – International trade statistics
8:30 a.m. – New claims for unemployment benefits
8:30 a.m. – Producer price index
10.30 a.m. – EIA weekly natural gas storage report
1:00 p.m. – 30-year bond auction
4:30 p.m. – Fed balance sheet and money supply

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ADTN, AMSC, DVR, EGO, FAST, HCSG, JCP, M, MFRM, MSW, NOK, NVDA, PGR, RAD, TITN