The report shows that the DDR3 2GB contract price stayed flat at an average $10.75, but the DDR3 4GB ASP did fall slightly by about 4.6% to $20.50 because DRAM makers were increasing shipment volumes. Also noted, “From the market perspective, benefiting from production cuts by Japanese and a number of Taiwanese manufacturers, the spot market continually saw price rebounds. While the increases only lasted a few short days at a time, the effects of supply-side production cuts were enough to present the depressed spot market with a chance to recover slightly.”

This showed that the difference between contract and spot unit price for DDR3 2Gb chips has shrunk to 12%.  And the DRAM maker hopes… “finally putting an end to the dismal DRAM price trend of the past few months.”

Here is how brutal the trend was… Since June, the DDR3 2GB contract price fell over 40% to a low of $10.50.  Sadly, this breaks the cash cost for the majority of DRAM makers.  On this front it was noted, “PC OEMs’ September inventory restocking has been much better than in the previous few months, causing 2GB contract price to stay flat. Although the market currently remains in a state of oversupply, production cuts across the board have improved the DRAM oversupply situation and eased the price decline.”  As a result, some DRAM manufacturers have started quoting higher spot prices.

Micron Technology Inc. (NYSE: MU), Americas home-grown DRAM giant, is up 3.3% at $7.09 and its 52-week range is $5.18 to $11.95.  Freescale Semiconductor Inc. (NYSE: FSL) has been a dismal memory IPO but even its shares are up 1.8% at $12.45 and the post-IPO range is $9.43 to $20.97.

MEMC Electronic Materials, Inc. (NYSE: WFR) makes silicon materials for chips (and for solar) and its shares are trading flat at $6.80 versus a 52-week range of $4.96 to $15.04.  Unfortunately, MEMC seems to be lost.

DRAM is certainly not flash memory… Still, we cannot ignore that what may be good news for the DRAM players could ultimately end up being some of the same for flash makers.  A smaller independent DRAM and SRAM maker Integrated Silicon Solution, Inc. (NASDAQ: ISSI).  Its shares are up 1.6% at $8.56 and the 52-week trading range is $7.01 to $11.79.  SanDisk Corp. (NASDAQ: SNDK) is up 3% at $42.19 and its 52-week range is $32.24 to $53.61. There is also Spansion Inc. (NASDAQ: CODE) in NOR Flash and it is only up 0.5% at $14.08 with a 52-week range of $12.82 to $21.60.

Texas Instruments Inc. (NYSE: TXN) is also on many aspects of memory and components under the semiconductor sector.  Despite a cautious outlook given recently, TI’s stock is up 0.7% at $26.84 and the 52-week trading range is $24.11 to $36.71.

The Semiconductor HOLDRs (NYSE: SMH) ETF is up 0.7% at $29.80 today and the 52-week range is $25.87 to $36.99.  SPDR S&P Semiconductor (NYSE: XSD) is less liquid as an ETF, but it has a better representation of component weightings.  Its shares are up 0.8% at $47.08 against a 52-week range of $41.71 to $64.06.

When we covered our Technology Value Series in August, we warned about the potential warnings or lowering of estimates.  That has also come about.  We also noted that the calendar may work against the sector into September, but then the calendar is generally believed to be favorable for the sector on a historic basis.  We are now almost in the second-half of September.

We strongly suggest for traders and investors to understand all of the nuances and details of these leveraged ETFs, but there are two to consider if you truly believe that DRAM makers are going to have a marked improvement.  The 200% mover is the ProShares Ultra Semiconductors (NYSE: USD) exchange traded product and the 300% mover is the Direxion Daily Semicondctor Bull 3X Shares (NYSE: SOXL).  You are on your own on those.

Unfortunately, some of the market strength seen his morning is coming out and these winners are now not up as much as they were in the first 30 minutes of trading.

JON C. OGG

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweet are a sign of which companies the Twitter universe is interested in. These financial sites are followed by a combined 625,000 Twitter users which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites.

Among the most tweeted stocks on StockTwits MACRO, USD, Nvidia(NASDAQ: NVDA), Zion Bancorporation (NASDAQ: ZION), Las Vegas Sands (NASDAQ: LVS)FT: BP shares fall amid fresh spill fears: BP’s shares have fallen as much as 5 per cent amid fears that some of the c… http://bit.ly/9z2vIc

CNN Money: Boeing wins $9.1 billion order from Emirates http://bit.ly/bjJIz0

Yahoo! Finance: Healthscope recommends $1.72 billion takeover offer from Carlyle and TPG Capital http://yhoo.it/9bduZP

DailyFinance: Google to Stop Selling Nexus One Smartphone http://bit.ly/aze6Zz

DailyFinance: China Now World’s Top Energy Consumer, Displacing U.S. http://bit.ly/cr0RSZ

Daily Finance: Moody’s Downgrades Ireland’s Credit Rating http://bit.ly/cx68U0

Douglas A. McIntyre

Applied Materials does represent about 13.55% of the Semiconductor HOLDRs (NYSE: SMH) ETF, but only represents about 5% of the Ultra Semiconductor ProShares (NYSE: USD) ETF.  We will be looking to its fiscal-2010 comments more than this last quarter.

While many analysts expect a recovery for 2010, with Thomson Reuters estimates at $0.38 EPS and $6.20 billion in revenues (higher than just a week ago), there is the notion of what to say about valuation and its stock performance.  With a loss for 2009 and with a P/E ratio of over 30 for next year, the bulls have to bet that the semiconductor companies are going to hike orders well above what the official expectations reflect even after considering the recently raised estimates.

Applied Materials was at $12.40 just on the close Friday, and shares are at $13.17.  This new increase represents gains of over 50% from March 9 and 15% just since June 30.  What is important here is the stock chart.  Shares did not get back down to the 200-day moving average two weeks ago ($11.66 now) and the current 50-day moving average ($13.02) was pierced this week.  $13.75 has acted as strong resistance in September and October.

Analysts are mixed and it appears that a consensus price target is over $15.00.  Options have been a bit active today ahead of earnings and it appears as though options traders are not really bracing for a move of more than $0.40 in either direction.

What is interesting is that the earnings reaction from Applied Materials is not likely to run back upstream to the end-users and  makers of chip and semiconductors.  We have already seen their earnings and more importantly their guidance, and in theory they can all hold off on cap-ex spending even if a recovery comes on stronger than what has been seen and compared to what is expected.  At the same time, cap-ex and equipment purchasing has greatly lagged the overall chip and tech recovery and Applied’s comments may potentially be key for evaluating semiconductor companies on their expense plans farther out into 2010.

Lastly, we will be paying close attention to what the company says regarding its solar operations for 2010.  The entire sector is under pressure as margins are contracting and orders are getting harder to come by or are getting pushed out.  Solar can be and is a great help to the energy problems that America and all countries face, but in many aspects these solar stocks may represent nothing more than a call option on much higher oil prices.  Stay tuned.

JON C. OGG
NOVEMBER 11, 2009

Intel is cutting its cap-ex expectations for the year.  The new range is $4.5 billion, plus or minus $100 million; and that is down from $4.7 billion, plus or minus $200 million. As a reminder, additional data will be out in the conference call and this is effectively all unfinished business.  We are seeing a reaction in the Semiconductor HOLDRs (NYSE: SMH) after a 0.15% drop to $26.24 with an after-hours level of up 2.7% at $26.20, and the Ultra Semiconductor ProShares (NYSE: USD) closed down 0.44% at $29.57 and it is trading up almost 5% at $29.80.

Intel closed up unofficially at the 4:00 bell by 0.44% at $20.49  and its 52-week trading range is $12.05 to $20.69.  Shares were halted ahead of the news.

UPDATE at 4:46 PM EST: Intel had traded 99.267 million shares before being halted and the stock is now trading up 6.7% at $21.74 and the trading volume is listed as 102.9 million shares.

Jon C. Ogg
October 13, 2009

• While we will be looking for direct comparisons in Microsoft, Advanced Micro Devices Inc. (NYSE: AMD) is the most directly tied to the company because of processors.  And in ETF-Land, Intel’s weighting in the Semiconductor HOLDRs (NYSE: SMH) is approximately 23% and it is 29.1% of the weighting of the Ultra Semiconductor ProShares (NYSE: USD).

Be advised, Intel’s guidance was raised just over a month ago based on “stronger than expected demand for microprocessors and chipsets.” Intel put guidance at $9.0 billion in revenues, plus or minus $200 million,  That was above its prior guidance of $8.5 billion, plus or minus $400 million.  Intel also put gross margin percentage “in the upper half of the previous range of 53 percent, plus or minus two percentage points.”  To show just how much higher estimates are, that earnings outlook from analysts is 40% higher than it was just about two and a half months ago.

Some analysts are still cautious, but the big calls in recent weeks were mostly positive.  Analysts have an average price target between $22.00 and $23.00, which is not exactly a huge bullish stance considering the $20.65 price today after a 1.2% gain.

Intel recently bounced after briefly trading under its 50-day moving average.  That figure is currently listed as $19.38, so we’d look to that for an implied absolute support area if the company suddenly somehow manages to disappoint with guidance.  The area where Intel is trading today and yesterday was also a toppy area back in September.

Options traders appear to be braced for a move of what looks to be only about $0.60 to $0.70 in either direction.  With options expiring on Friday, there is a very low time value premium left in these options.

As we noted over the weekend, since the end of June Intel is up 22.5% and since the March 9 close (widely recognized as the absolute market bottom day) this is up over 60%.  That being said, Intel may have beat targets and raise estimates to keep everyone happy or at least to keep investors from wanting to lock in some profits.

JON C. OGG
OCTOBER 13, 2009