Verizon may be the best example among large companies of a firm that has more products than the market can bear. The firm showed four new smartphones and several tablets. Some of the phones will work on the new Verizon 4G wireless network which will not be finished for well over a year. Verizon appears to want to spread its risk across  many devices. Most may fail to get consumer attention. Perhaps one or two will receive broad adoption. Verizon is large enough to live with its failures.

Samsung may hold the pole position among consumer electronics manufacturers when it comes to product releases at CES. It has new versions of its Galaxy tablet. Some have WiFi capacity. Some will work on 3G networks, and other on 4G infrastructure. Samsung is also releasing several smartphones. It has been late to the market even though it is the No.2 cellphone operation in the world.

The space for content providers at CES is also crowded. Hulu will announce partnerships with several hardware companies. So will Netflix (NASDAQ: NFLX). It is not certain that people want to watch premium programs on small screens. That has not kept video content providers from assaults on the market.

CES has become a graveyard for new ideas and new products. That may mean the end of the early runs for small companies with only one or two products. Larger companies, however, will throw as many products at the wall as they can, and hope some of them will stick.

Douglas A. McIntyre

 
By integrating GPU functions on a microprocessor, Intel and AMD will increase computational speed, reduce the number of components that PC makers will need to integrate, cut the makers’ production costs, and make PCs and laptops smaller and more energy efficient.

 
Eliminating the need for a separate graphics co-processor poses a threat to Nvidia’s GPU business for an integrated graphics card in PCs and laptops that are used as general purpose computers. But high-end graphics applications, like video editing and games, are not likely to be affected much because those applications still require more graphics horsepower than either Intel or AMD can stuff into their CPUs.

 
And while this is an interesting skirmish, the real battle remains between PCs and laptops on one hand, and mobile devices like smartphones and tablets on the other. The Intel and AMD chips are not designed for mobile devices, and that’s where the buyers are headed.

 
The dominant makers of CPUs for mobile devices are Qualcomm Corp. (NASDAQ: QCOM) and ARM Holdings plc (NASDAQ: ARMH), and they are not sitting still. Nor is Broadcom Corp. (NASDAQ: BRCM), which recently announced a baseband chipset for smartphones that offers a dual-core ARM processor, support for Bluetooth, GPS, a five-megapixel camera, and higher definition graphics.

 
The Broadcom chipset is not exactly the big news. The big news is the price. A smartphone based on the Broadcom chipset could retail for less than $100, and that could happen by the middle of 2011. These phones would use the Android operating system from Google Inc. and would be targeted at the low end of the market. A device built on the Broadcom chipset and Android could offer the capability of a $530 Nexus S for less than $100 by this time next year according to an article in Fortune online.

 
Nvidia, too, has a potent competitor in the mobile device area based on the dual-core ARM processor. The company has received substantial orders from Samsung, HTC, and others for its Tegra 2 processor that is expected to power new tablet devices.

 
To top all this off, Goldman Sachs has predicted that tablets will cannibalize as much as 35% of PC sales. That’s an aggressive forecast, but even a more conservative forecast from Gartner has tablets eating up 10% of PC sales by 2014.

 
Facing slower growth in the PC and laptop markets means that Intel and AMD are forced to find ways to cut costs to computer makers so that these customers can compete with mobile devices that are increasingly powerful and getting cheaper, it seems, by the day. But even falling prices for PCs and laptops won’t prevent severe erosion of those markets by mobile phones and tablets.

 
Paul Ausick

The Verizon Wireless website shows that the Droid X is sold out until July 27 when handsets ordered now will be shipped.

The news represents another example of the lack of product planning by large smartphone companies. Apple had similar problems with the iPhone 4 and iPad.The critical difference between the Droid X and iPhone is that the Droid is not considered one of the top-tier products in the industry, a position enjoyed by Apple and Research In Motion (NASDAQ: RIMM), which makes the Blackberry. Motorola, which was almost destroyed when its RAZR handset sales lost momentum, has a small window of time to gain market share in a competitive field that includes Apple, RIMM, Samsung, LG, and smartphone laggard Nokia (NYSE: NOK).

Motorola’s shares dropped from almost $26 at the height of the success of the RAZR in 2006 to just above $3 in March 2009.  Shares have recovered to $7.50, but without an extremely successful set of Droid launches, Motorola will slip to the back of the smartphone track again.

Douglas A. McIntyre

Reuters:   Saudi investors are seeking a 10% to 15% stake in BP.

Reuters:   Microsoft Corporation (NASDAQ: MSFT) will cut a small number of jobs.

Reuters:   Borders launched an e-book store.

Reuters:   Sony (NYSE: SNE) cut its e-reader price to better compete with the Amazon.com (NASDAQ: AMZN) Kindle and Barnes & Noble (NYSE: BKS) NookReuters:   Google Inc.’s (NASDAQ: GOOG) China website is being reviewed by the government.

Reuters:   China’s AgBank priced to be the largest IPO in history.

Reuters:   ICBC, one of China’s largest banks, may raise more money.

Reuters:   KKR will probably launch its IPO in mid-July.

WSJ:   Job benefits may cause the jobless to “pickier” in the job searches.

WSJ:   Steel production in falling, a sign that the economy is slowing.

WSJ:   Apple Inc (NASDAQ: AAPL ) said an app developer fraudulently set up several hundred iTunes accounts.

WSJ:   Japanese companies are redesigning products for emerging markets.

WSJ:   Google has increased its efforts to get more marketshare for its Chrome browser.

WSJ:   BP plc said it will not issue new equity.

WSJ:   VW added to its stake in Porsche.

WSJ:   The Obama home energy efficiency program may cause problems for real estate investors.

WSJ:   The UK is cutting its budget while the US is considering increasing its spending plan.

WSJ:   The EU said Monsanto cannot stop Argentine farmers who export seed with the company’s patented formula to Europe.

WSJ:   AT Kearny and Booz called off merger talks.

WSJ:   European governments are selling more property to bring in money.

NYT;   India is expanding its role as a drugmaker.

NYT:   UK inflation could hurt that nation’s recovery.

FT:   The Walt Disney Company (NYSE: DIS) will expand its language schools in China.

FT:   The earnings for global investment banks will drop sharply.

Bloomberg:   Samsung posted a record profit on chip sales.

Bloomberg:   China will put a resource tax on oil, gas, and coal on western sections of the country.

Bloomberg:   Microsoft Xbox sales probably broke $1 billion in the company’s last fiscal year.

Douglas A. McIntyre

Shares sit above $9.00 today and the 52-week trading range is $7.82 to $15.05.  Its multi-year trading range is not that much different.  Today there are rumors abound that Micron may sell off its Image Processor Unit to Samsung Electronics.  This rumor is based upon a report noting that Samsung was considering an acquisition of Micron’s image sensor operations. 

If Micron will pick up the phone, it should have an easy audience besides just Samsung.  Foreign chip giants like STMicroelectronics (NYSE: STM/ADR) and Taiwan Semi (NYSE: TSM/ADR) immediately come to mind and with the US Dollar trading like a Peso they’d be getting an on-sale asset (or assets) at an extra discount. 

Micron has been shown a path here that Wall Street may reward.  Even if Micron is not selling the unit to Samsung, the company should consider selling it and/or other units to someone.  Micron could also at least consider splitting itself up after that has also been discussed by many in the past.  This has been under review for the 247WallSt.com Special Situation Investing Newsletter in the past, and perhaps another review may be worth a closer look for our subscribers.

Some troubled businesses may be in-play or out of favor, but when they are in trouble like Micron they should pay more attention to how Wall Street reacts when the stocks moves on certain rumors or reports.  Wall Street doesn’t like rewarding losers, particularly not during a credit crunch.  The good news is that with a $7 Billion market cap it trades actually very close to its stated book value.  Since this is not expected to get back to annual profitability until Fiscal 2009 it is the right time to consider its value options.

At the current prices, Micron even qualifies for our "10 Stocks Under $10" Newsletter.

Jon C. Ogg
December 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.