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Thursday, January 15, 2009

Tech Roundup – January 15, 2009


PC Industry (various symbols)

From WSJ:


PC shipments world-wide dropped 0.4% in the fourth quarter from a year

earlier, the first year-to-year drop in six years, according to Interactive Data

Corp. Rival market-research firm Gartner offered a slightly more upbeat estimate

Wednesday, reporting that fourth-quarter shipments world-wide rose 1.1%.

PC sales in the U.S. were particularly weak, with shipments falling 3.5%,

according to IDC. Gartner said U.S. shipments dropped 10.1%.

The poor showing represents a "pretty dramatic drop" in the market compared

with the year-earlier quarter, when world-wide sales grew 15.5%, said IDC

analyst Loren Loverde. He said sales of netbooks -- laptop PCs that sell for

less than $500 -- were the market's single bright spot.

About five million of the small PCs were shipped in the fourth quarter, he

said, bringing the 2008 total to about 10 million. At the same time last year,

that market was "basically nonexistent," he added.

But netbooks are typically priced from $300 to $500 and carry low profit

margins, contributing to what Gartner described as a "record decline" in PC


Hewlett-Packard Co. remained the world's largest PC maker, increasing

shipments 3.1% as its global market share grew to 19.6% from 19% last year,

according to IDC.

But rival Dell Inc., the No. 2 PC maker saw its world-wide shipments drop

6.3%, IDC said.

The Skew: This all makes sense, right? Desktops are getting slammed. It was only last quarter that notebooks replaced desktops as the majority of new sales. Netbooks in the $300-500 price point are the fastest growing segment and showing significant unit growth at the expense of higher priced notebooks. Underlying trends like this coupled with a severe contraction in consumer spending has led to one of the weakest quarters on record for the industry. Intel guided down twice – no one should be shocked here.

Within the numbers, Acer is picking up a lot of unit share due to their successful Aspire One line of netbooks, Dell is losing significant share. As Dell added retail channels late last year, this is particularly ominous. HP held share. Apple gained share.

It is extremely likely that the March quarter, without the significant holiday spending catalyst, will be catastrophically bad for the entire industry from a historical perspective. Business conditions continue to deteriorate worldwide and consumer spending is still extremely reserved. I continue to think Dell is a short. On a relative basis, HPQ will outperform because they aggressively manage costs and because printer ink is the fattest margin product in technology which subsidizes marginal hardware profitability elsewhere.




Xilinx (XLNX)

Reports 458 mil revs, beating 440 mil consensus. Gross margins exceeded street estimates by half a point. Guide for decline of 15-25% in revs – 344-390 mil versus consensus of 410 mil. Gross margins are expected to be 61-63% versus street at 63.3.

The Skew: Consumer and auto down 12% q/q, data processing down 20% q/q, communications down 3% q/q, industrial flat due to defense up 20% q/q. Numbers are going to $.70ish for 09. Chart looks broken and dangling. No near-term catalysts. Doesn't sound good, does it? Some will pick on Altera (ALTR), who reports on January 27th. I suggest you ignore people telling you to trade Altera off Xilinx. It's a totally derivative idea. In fact, if there's a big move in Altera one way or the other I suggest you fade it because it's a bunch of cattle driving the move.


Apple Computer (AAPL)

Steve Jobs is taking a leave of absence until June.

The Skew: Steve says he recently became aware that his health problems are more complicated than he had thought. No comment about the quarter from the company but they've been pretty good about keeping Steve's health issues and the company's health issues separate. No edge here, I'm still not a doctor. I stumbled upon a commencement speech Steve gave at Stanford after being diagnosed with cancer. It won't make you any money but it might make you reflect a little.



More coming pre-opening. Check back.

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