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Tuesday, January 20, 2009

Tech Roundup – January 20, 2009

Western Digital (WDC)

Weisel lowers #s for the quarter from 32 cents to 8 cents. The channel is taking inventories from 5 weeks to 4 weeks, thereby reducing sales by ~200 mil for the quarter to 1.2 billion.

The Skew: Channel inventories are getting a little on the light side but that's probably a good thing for drive makers. Demand is also falling and therefore these cuts are likely in-line with slowing velocity across the chain. The stock trades at 4*cash and near book value. No trade suggested.


Semiconductors (various)

Piper has a note out saying Q1 will represent the end of the bulk of estimate cuts. They expect inventory to snap back in Q2/Q3 and then expect demand to be overshot by an overzealous industry. This will be followed by a multi-year super cycle starting in the middle of 2010. The super cycle will be amplified by capacity underinvestment. They like ATHR, SLAB, MPWR for inventory bounceback and ASML and ONNN for the super cycle.

The Skew: Multi-year super cycle! Give the guy credit for laying some vision out there. Based on the downward trajectory of the semis, a snapback could very well happen at some point, and it could be as soon as June – the curve of such an upturn remains very much in question. Inventory restocking rallies do tend to have some power and it will likely be worth playing when it happens. Multi-year super cycle is mighty aggressive.


Apple (AAPL)

NPD showed a pick-up in Apple sales for the month of December, driving Macs to in-line with the street estimates of +8% y/y and iPods to down 10% y/y with street down 16% y/y.

The Skew: Stock is pretty compressed but March quarter is the one to worry about. Lack of holiday enthusiasm is likely to push seasonality much lower for Apple.


Intel (INTC)

Intel (INTC) cuts processor prices by as much as 40%.

The Skew: Significantly lower guidance and major gross margin pressure factored into guidance late last week. Consider this part of the plan.


Taiwan DRAM

Taiwan's Financial Supervisory Commission (FSC) puts on hold idle equipment write-off changes to avert "increasing companies' financial obligations" for many DRAM companies.

The Skew: They're out of whack with most other nations. Could bring up some accounting issues if Micron (MU) does indeed merge with Taiwanese players as accounting standards appear to be different.


Google (GOOG), Interactive (IACI)

Efficient Frontier (private search advertising firm) reports search advertising spending fell 8% in 2008. This is the first quarter of negative annual growth recorded by EF in the several years they've been gathering data. Also, comScore reported on market share trends in search advertising. Most major web destinations held steady, though Interactive Corp's lost some share in December. Google search queries were up 4% m/m according to the group.

The Skew: As consumer expectations plunged so precipitously starting in September, its not entirely surprising that search advertising would see cuts – at the least, you'd expect keyword prices to have declined in much the same way average consumer spending tickets did. If people spend less, their clicks and eyeballs are worth less too. As cited on theskew a number of times over the past several months, Google (GOOG) has been in spending lockdown mode as if they see something calamitous looming. Expect Google to show excellent expense controls and margin expansion when they report – and worry about the top line.


LCD panels

Panel shipments down 24% y/y. WitsView says could've been worse.

The Skew: No edge.



Ballmer, Bostock and Bewkes (MSFT, YHOO, TWX) had a sit down at the Time Warner Center the other day, according to Kara Swisher of reports the meeting was an informal merger discussion but doesn't mention Bewkes was there.

The Skew: Speculation may run on this. Bartz's lack of attendance suggests she's serious about taking her time about any search deal decisions. I'd go with Swisher's version. My inclination is a deal happens eventually. Yahoo as a standalone company is an eroding asset and its unlikely Bartz is going to come up with a better idea, regardless of what her self-proclaimed gut tells her. Quarter will be very poor – selling before and buying afterwards seems like a good plan.


Cisco (CSCO), VMWare (VMW)

Cisco (CSCO) plans to sell servers outfitted with virtualization software from VMWare (VMW).

The Skew: Good news for VMW. Stock should see a nice pop today. EMC preannouncement would indicate current Q is okay, though I hear the pipeline/outlook for EMC is a little iffy for the March quarter.


Satyam (SAY)

Satyam founder may have just stolen it all.

The Skew: You know, if that's the case, Satyam might be less worthless than the $1 closing price – if the money was embezzled, then we're talking about thievery of profits as opposed to non-existent profits – a potentially big distinction when evaluating what's left after the dust clears.


Madoff (JERK)

Speaking of vanishing billions, reports are investigators can't find any evidence of trades.

The Skew: It's tough to lose money when you don't trade. Expect to find out Madoff also siphoned billions of dollars into the ether. Perhaps the money hasn't been lost as much as not found.





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