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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

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

24/7 Wall St. Closing Bell (CHK, LVLT, QCOM, CRM, DSX, COCO, APA, WNR, YRCW, SHOO, SRE, SLE, RGLD, OWW, GM, MGM, AES, LNG, DUK, EL, PGR, WPO, GMCR, KNSY, HLF)

Paul Ausick — Thu, 03 May 2012 20:08:03 +0000

The major US stock indexes opened mostly flat this morning following a softer-than-expected report from the Institute for Supply Management on non-manufacturing growth (our coverage here). The report on new unemployment benefits claims came in better than expected, but not enough to overcome the ISM numbers (more coverage here). Retail sales reports were also weak, with growth of just 0.8% compared with an estimate of 1.5% (more coverage here). The energy sector has been particularly hard hit today on reports that supply is keeping up with demand, some weak earnings reports, and a comment from OPEC that it would like to see Brent crude at $100/barrel, not $120 or more (our coverage here).

The US dollar index rose today, now up 0.11% at 79.221. The GSCI commodity index is down about -1.3% at 678.65, with commodities mixed on the small gains in the dollar. WTI crude oil closed down -2.6% at $102.54/barrel, and Brent crude trades down -1.84% at $116.02/barrel. Gold settled down -1.2% today, at $1,634.80/ounce.

The unofficial closing bells put the DJIA down nearly 62 points to 13,206.59 (-0.47%), the NASDAQ fell more than 35 points (-01.16%) to 3,024.30, and the S&P 500 fell -0.77% or nearly 11 points to 1,391.57.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) maintained as ‘buy’ but target price cut to $31 at BofA/ML and raised to ‘outperform’ at Bernstein; Level 3 Communications Inc. (NYSE: LVLT) reiterated ‘buy’ at SunTrust Robinson Humphrey and cut to ‘neutral’ at Piper Jaffary; Qualcomm Inc. (NASDAQ: QCOM) reiterated as ‘buy’ at BofA/ML; and Salesforce.com (NYSE: CRM) raised to ‘outperform’ with a $185 target price at Credit Suisse.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Diana Shipping Inc. (NYSE: DSX) is down -4.4% at $7.63; Corinthian Colleges Inc. (NASDAQ: COCO) is down -21.6% at $3.05; Apache Corp. (NYSE: APA) is down -3.7% at $91.99; Western Refining Inc. (NYSE: WNR) is down -2.6% at $18.42; YRC Worldwide Inc. (NASDAQ: YRCW) is down -8% at $6.79; Steve Madden Ltd. (NASDAQ: SHOO) is down -1.7% at $43.54; Sempra Energy (NYSE: SRE) is up 0.6% at $64.29 after posting a new 52-week high of $65.37 earlier today; Sara Lee Corp. (NYSE: SLE) is down -1% at $22.10; Royal Gold Inc. (NASDAQ: RGLD) is down -2.6% at $59.43 (more coverage here); Orbitz Worldwide Inc. (NYSE: OWW) is up 4.9% at $4.09; General Motors Co. (NYSE: GM) is down -2.3% at $22.42 (more coverage here); and MGM Resorts International (NYSE: MGM) is down -4.4% at $12.95.

Tomorrow we get earnings from AES Corp. (NYSE: AES), Cheniere Energy Inc. (AMEX: LNG), Duke Energy Corp. (NYSE: DUK), Estee Lauder Companies Inc. (NYSE: EL), Progressive Corp. (NYSE: PGR), and The Washington Post Co. (NYSE: WPO).

Other standouts from today include the following stocks:

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is down -47.3% at $26.11. The company reported earnings last night, and lowered guidance. More coverage here and here.

Kensey Nash Corp. (NASDAQ: KNSY) is up 32.2% at $38.35. The company is being acquired by a Dutch firm for $360 million. More coverage here.

Herbalife Ltd. (NYSE: HLF) is down -12.7% at $46.02. The nutrition products company flubbed some questions at last night’s conference call. More coverage here.

Stay tuned for Friday. San Francisco Fed President John Williams is giving a speech. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – Non-farm payrolls
3:00 p.m. – Treasury STRIPS

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AES, APA, CHK, COCO, CRM, DSX, DUK, EL, GM, GMCR, HLF, KNSY, LNG, LVLT, MGM, OWW, PGR, QCOM, RGLD, SHOO, SLE, SRE, WNR, WPO, YRCW

Top Analyst Upgrades & Downgrades (ALGN, BHI, CACI, CAB, CHK, DVA, GMCR, LVLT, MSCI, ONXX, PCLN, QCOM, QIHU, CRM, TTM)

Administrator — Thu, 03 May 2012 12:18:17 +0000

These are some of the top analyst upgrades, downgrades and initiations seen in Wall Street research calls this Thursday.

Align Technology, Inc. (NASDAQ: ALGN) named Bull of the Day at Zacks.

Baker Hughes, Inc. (NYSE: BHI) named Bear of the Day at Zacks.

CACI International. Inc. (NYSE: CACI) Cut to Neutral with $53 target at Credit Suisse.

Cabela’s, Inc. (NYSE: CAB) reiterated Strong Buy and named as value stock of the day at Zacks.

Chesapeake Energy Corporation (NYSE: CHK) maintained Buy but cut target to $31 from $38 at BofA/ML; Raised to Outperform at Bernstein.

DaVita Inc. (NYSE: DVA) Cut to Neutral at R.W. Baird.

Green Mountain Coffee Roasters (NASDAQ: GMCR) Cut to Neutral at SunTrust Robinson Humphrey; Cut to Neutral at Piper Jaffray.

Level 3 Communications Inc. (NASDAQ: LVLT) Reiterated Buy with $37.50 target at BofA/ML.

MSCI Inc. (NYSE: MSCI) Raised to Outperform with $42 target at Credit Suisse.

Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) maintained Buy but removed from Conviction Buy List at Goldman Sachs.

Priceline.com (NASDAQ: PCLN) reiterated Strong Buy and named the Aggressive Growth stock of the day at Zacks.

QUALCOMM Inc. (NASDAQ: QCOM) Reiterated Buy at BofA/ML.

Qihoo 360 Technology Co. Ltd (NYSE: QIHU) Started as Buy at Jefferies.

Salesforce.com Inc. (NASDAQ: CRM) Raised to Outperform with $185 target at Credit Suisse.

Tata Motors Ltd. (NYSE: TTM) Started as Overweight at HSBC.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

JON C. OGG

Filed under: Analyst Calls Tagged: ALGN, BHI, CAB, CACI, CHK, CRM, DVA, featured, GMCR, LVLT, MSCI, ONXX, PCLN, QCOM, QIHU, TTM

Apple-Fever Spreads To Its Component Makers (AAPL, AMD, BRCM, MRVL, MU, LSI, QCOM, SNDK, SWKS, TQNT)

Administrator — Wed, 25 Apr 2012 12:31:48 +0000

By now everyone in the world knows that Apple blew the door off the hinges on its latest quarterly earnings report. The consumer electronics giant overcame iPad shortages with very strong iPhone sales led by overseas markets. The Apple-fever this morning is spreading to Apple’s component suppliers and we are taking a look at some of the key suppliers for Apple.

Apple shares are up over $56.00 at $616.74 on last look and we have already seen more than 1 million shares trade in the pre-market with well over an hour until the open. Here are some of the moves in the Apple component players:

Advanced Micro Devices Inc. (NYSE: AMD) is up over 1% at $7.40 on thin volume. Broadcom Corp. (NASDAQ: BRCM) is up 4.6% at $34.42.

LSI Corporation (NYSE: LSI) is indicated up around $8.10 to $8.20 (+1% to +2%) after an $8.03 close.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is down 2.2% at $15.31.

Micron Technology, Inc. (NASDAQ: MU) is up 1.5% at $6.61.

NXP Semiconductors NV (NASDAQ: NXPI) is indicated up about 1% after getting a CNBC tout as a growing Apple supplier for the next generation chips.

Qualcomm Inc. (NASDAQ: QCOM) is up 2.5% at $63.41.

SanDisk Corporation (NASDAQ: SNDK) has warned twice in recent weeks but it is getting some love as well with a gain of 1.7% at $37.10.

Skyworks Solutions Inc. (NASDAQ: SWKS) is up 7% at $25.60.

TriQuint Semiconductor Inc. (NASDAQ: TQNT) is up 10% at $5.67.

When one stock goes up, everyone looks at the other plays out there that benefit too. When Apple is so big, it leaves a lot of room for growth.

JON C. OGG

Filed under: Consumer Electronics, Semiconductor, Technology Companies Tagged: AAPL, AMD, BRCM, LSI, MRVL, MU, QCOM, SNDK, SWKS, TQNT

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

What’s Important in the Financial World (4/20/2012) French Elections, iPhone 5, Ford in China

247wallst — Fri, 20 Apr 2012 10:41:29 +0000

The amount the International Monetary Fund can raise, primarily to help to create a sovereign firewall for Europe, stands at $320 billion. Although, several nations have said they will help push the sum close to the $400 billion goal. Media reports suggest that the most likely source of new money is the BRIC nations. But they are not budging. Each expects to have more of a say in IMF policies. The fact that a Frenchwomen, Christine LaGarde, was picked as the new head of the fund has not helped. The complaint of the BRICs, however, goes well beyond that. The fair question most have asked is why they should put money into a rescue of recession-plagued Europe when their economies have become a great part of the engine that drives global growth. Chinese news outlet Xinhua reports that China’s Foreign Ministry spokesman, Liu Weimin, said. “We are willing to discuss various funding plans for the IMF with IMF members, in a frank and positive manner.” Translated, that means the IMF cannot spend China’s money if China is marginalized as part of the process.

French Leadership

Polls in France show that current president Nicolas Sarkozy will serve only one term. He is about to be defeated by Socialist Francois Hollande, who has said he will increase taxes on the rich. Some economists believe that his tax plans will be regressive and will hurt the level of income to France’s treasury. Hollande also has said he will increase what the government spends to stimulate France’s anemic economy. These actions could cause ratings agencies to quickly cut their ratings of the nation’s sovereign paper. That may have the effect of increasing France’s borrowing costs. Hollande’s view of how the European Union has pressed austerity on nations in the region that are economically weak may also alter the tenor of how the southern European nations are treated. Sarkozy has been a partner, although often a reluctant one, of the major power in the region — Germany. A fracture in that relationship could upset the current plans to save the EU economy, at least as far as the area’s finance ministers decided recently.

Ford in China

Ford (NYSE: F) plans to increase it production facilities and dealer outlets in China twofold by 2015. The second-largest U.S. car firm said it would build a $760 million auto assembly plant in the eastern Chinese city of Hangzhou. Ford has joined the race to gain market share in the People’s Republic, where 18 million cars and light trucks were sold last year. But Ford faces formidable odds. General Motors (NYSE: GM) and its local joint venture partner SAIC are the market share leaders. Global manufacturing giant Volkswagen is not far behind. The rush into China includes every major auto firm in the world. The high-end luxury market has attracted BMW, Mercedes and Audi, each of which believes it can cater to China’s new rich. The other hurdle in China is that nationwide sales have stalled. First-quarter shipments of new cars and light trucks were up only 4.5%. If that level continues, China rapidly will become much less attractive to every manufacturer in the market. Ford may find it has overbuilt.

iPhone 5 Launch

The Apple (NASDAQ: AAPL) iPhone 5, which was supposed to be released in June, July or August — depending on the rumor — will be out in October, according to famous Apple watcher Piper Jaffray’s Gene Munster. He said signals from Qualcomm (NASDAQ: QCOM), which makes components for Apple, were the basis for most of his forecast. But that is really no better than a guess. What Munster and other experts cannot say is how the iPhone 5 will be different from the ridiculously successful iPhone 4S. The 4S has the new Siri voice recognition system, a more powerful chip than previous models, and a higher resolution screen. Each of those features could be upgraded. However, the most likely leap forward for the iPhone 5 is that it will work on new superfast 4G networks. Several Apple competitors, most notably Samsung, already make smartphones for 4G. AT&T (NYSE: T), Verizon (NYSE: VZ) and Sprint-Nextel (NYSE: S) have promoted these networks more than they have individual smartphones as they battle one another for market share. An iPhone 5 could accelerate the migration from 3G to 4G, if the product is as popular as its predecessors.

Douglas A. McIntyre

Filed under: Market Open Tagged: AAPL, F, GM, QCOM, S, T, VZ

iPhone 5 In October

247wallst — Fri, 20 Apr 2012 10:26:02 +0000

The Apple (NASDAQ: AAPL) iPhone 5, which was supposed to be released in June, July, or August–depending on the rumor–will be out in October according to famous Apple watcher Piper Jaffray’s Gene Munster. He says signals from Qualcomm (NASDAQ: QCOM) which makes components for Apple, are the basis for most of his forecast which is really no better than a guess.

What Munster and other experts cannot say is how the iPhone 5 will be different from the ridiculously successful iPhone 4S. The 4S has the new Siri voice recognition system, a more powerful chip than previous models, and a higher resolution screen. Each of those features could be upgrade. However, the most likely leap forward for the iPhone 5 is that it will work on new super-fast 4G networks.

Several Apple competitors, most notably Samsung, already make smartphone fo 4G. AT&T (NYSE: T), Verizon (NYSE: VZ), and Sprint-Nextel (NYSE: S) have promoted these networks more than they have individual smartphones as they battle one another for market share. An iPhone 5 could accelerate the migration from 3G to 4G if the product is as popular as its predecessors.

Filed under: Consumer Electronics Tagged: AAPL, QCOM, S, T, VZ

Earnings On Deck: QUALCOMM vs. SanDisk (QCOM, SNDK)

Administrator — Wed, 18 Apr 2012 16:33:24 +0000

QUALCOMM Incorporated (NASDAQ: QCOM) is set to report earnings after the close of trading on Wednesday, while SanDisk Corporation (NASDAQ: SNDK) is set to report earnings after the close on Thursday. If it seems odd that a mobile processor and architecture leader is being compared to the independent flash memory leader, then perhaps the smartphone revolution has not caught up entirely as much as it should have.

QUALCOMM Incorporated (NASDAQ: QCOM) is expected to report $0.98 EPS and $4.84 billlion in sales. At $66.80, the 52-week trading range is $45.98 to $68.87. More important than everything is that the market cap is now $113 billion.

SanDisk Corporation (NASDAQ: SNDK) already warned about sales, earnings, and margins and this conflicts with some of the expected strength from the smartphone and consumer electronics that QUALCOMM has been immune from so far. SanDisk is expected to report $0.70 EPS and revenues are expected to be $1.23 billion. At $40.82, the 52-week trading range is $32.24 to $53.46.

What is obvious today is that the strength is expected to be geared toward QUALCOMM while the caution is geared toward SanDisk.

JON C. OGG

Filed under: Consumer Electronics, Earnings, Semiconductor, Technology Companies Tagged: QCOM, SNDK