The Skew

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Monday, July 6, 2009

What kind of crummy blog is this? Where are the updates?

I’ve accepted a position at Concept Capital.

The blog is on extended hiatus for the time being.

I am still active in the markets and reachable at

I look forward to hearing from you.

Monday, June 8, 2009

Live stream of the Apple WWDC

Pretty rare to get a stream of this.  Our seats suck, the audio is scratchy and I can hear keyclicks and digital cameras going off every couple of seconds, but here it is:

June 8, 2009

DB positive QCOM after meeting with management, believes upside to ASIC shipments for this q and likely for next.  Co has seen baseband shortages but believes they will be alleviated shortly.

MS positive MU, citing qualification and initial shipments of 32mb NAND to AAPL.

GS expecting better than consensus and guidance revenue and EPS for NSM with cost cutting measures ahead of plan.  They reiterate sell on valuation.  Also expecting slightly better results from TXN on their mid-quarter update tonight after the close.

Citi raises #s on INTC, citing lean channel inventory.  They go from 7 to 7.15 bil for the quarter – 7.4 bil is more likely in my opinion.  At Computex, Atom processors were the predominant processor for netbooks and design wins for ARM-based processors from NVDA and QCOM were hard to find.  Intel has a growth multiple without growth and it will be very hard to hold ASPs with netbook processors the predominant growth engine at a fraction of the value of mainstream microprocessors.  Citi also raises #s in QCOM and XLNX, citing strength in China.

Barclays has a piece out spinning Chinese solar negative based on increased poly supply and high receivables, which exposes the companies to lower margins and debt collection problems.

Monday, June 1, 2009

SOX chart


Important level coming up.

Thursday, May 14, 2009

Roundup – May 14, 2009

It wasn’t just Ken Lewis with his arm twisted behind his back.  In mid-October, the Treasury told a panel of 9 major banks that they had to either voluntarily take capital infusions or they would be tied down and given them anyway.

Zillow reports 74% of homeowners believe their home will hold or gain value over the next 12 months and 63% believe home values in their markets will increase or stay the same.  One third of the group said they would be somewhat likely to put their homes on the market in the next 12 months if the real estate market started to turn around – in other words, there is substantial shadow inventory waiting to hit a bid.  Homeowners in the West seem most aligned with reality, scoring a 2 on Zillow’s “Misperception Index” (zero is reality), Northeastern perception is the most out of whack, scoring an 11.  Skew:  92% of this survey group also believe in Santa Claus, the Easter Bunny and the full faith and credit of the United States Government.

IBM said 2010 earnings of $10-11 are likely.

Phoenix Solar indicated large scale solar projects are getting back on track.  In related news, the head of China’s National Energy Administration’s New Energy Department said large scale PV projects will not be eligible for subsidies – they are likely to promote feed-in tariffs instead.

Synaptics has a touchscreen design win at Nokia, according to Digitimes.

Panel demand is showing signs of decline, according to BenQ.  Not surprising as the industry has practically doubled production sequentially.  Sony blowing up isn’t going to help the case against this theory.  Don’t like Corning here.

Speaking of Sony, I walked through their store yesterday.  Their prices are idiotic.  Everything they sell is twice the going rate of comparable products.  I know Madison Avenue rent is high but come on -- $1000 for a netbook?  It doesn’t even have a real keyboard.  They’re wildly out of price position in every market they serve and they’re losing all their key markets to competition – music players to Apple, video games to Nintendo, televisions to Samsung.  Sony seems like they’re in serious long-term trouble.

Wednesday, May 13, 2009

Quick and dirty – May 13, 2009

Applied Materials reported better revenue, worse orders, guided to a midpoint of revs in-line with consensus and suggested orders will be up next quarter.  Typically these stocks trade on direction of orders.  At 2* book, Applied has already gravitated higher in anticipation of some recovery.  Watch the stock for stability around $11.  Below there is trouble.


Intel said business is tracking better than they expected for next quarter and the worst is behind us.  A month ago when they reported, the company had declined to give guidance but had said they were “planning” for flat business.  This gives credence to the Intel was low-balling argument.  Furthermore, with most PC builders (Compal, Quanta, Wistron) suggesting 15-20% growth for the June quarter, Intel’s guidance seems subdued on a relative basis.  Their comments should not be too surprising.  Sounds like you should buy Intel, right?  Numbers are too low!  Maybe.  On the other hand, Intel’s sales are stagnant over the long-term and the stock has a premium growth multiple here.  Even if estimates wind up being 70 cents instead of 53 cents where they are now for the year – do you want to own this stock trading at over 20* earnings?  I think you have to think Intel is going to grow at over 20% over the next several years to make that bet… and I don’t see how that would happen.

The PC is becoming the television and the economics there will follow.  Who was the most successful producer of cathode ray tubes?  You don’t know?  EXACTLY.  As the internet continues to become the dominant usage for computing devices, the importance of companies like Microsoft and Intel will fade.  Unless they can make themselves relevant to an internet-based computing world, they will slip into obscurity.


Elpida Memory reported.  They changed their depreciation schedule from 5 years to 9 years, which averted triggering financial covenant defaults.  Extremely deceptive… and concerning.



Taiwan Semi wants in to PV production.

Panel makers saw a big sequential bump in production in April.  Despite the big increase, sales are still down 40% y/y.

Wafer prices are coming down again as solar demand continues to suck.  Yesterday there was a piece talking about poly prices dropping.

Tuesday, May 12, 2009

STEC 1Q:2009 results ( $STEC )

STEC finally reports a big number.  Consensus was 59 mil and 11 cents – they report 63.5 mil and 17 cents.  Gross margins were the big surprise, rising 7.5% sequentially to 39.8%.  The company indicated gross margins on ZeusIOPS, the drive used by their major OEMs for enterprise solutions, were above 40% and will head toward 50% next quarter.  Guidance of 68-70 mil and 20-22 cents is well ahead of consensus of 59 mil and 10 cents.  Higher margin enterprise solid state drives will account for more than 50% of business in the second quarter and DRAM products, which were 100% of business a couple of years ago, were 12% of revenues this quarter and will continue to shrink.

Weisel throws out 94 cents for this year and an aggressive $1.45 for next.  The stock is up 30+% pre-opening.

I have to say, I’m a little confused about their margin structure.  They said they have long-term procurement deals with their suppliers to buy specialized 16mb SLC NAND at fixed prices that are not tied to contract.  It’s extremely unusual if that’s the case.  I’d like to better understand their deal.

STEC indicated they see no firm competition in the enterprise SSD space and don’t expect any for the rest of the year at least, though clearly competitors will try to encroach over the coming quarters.  Dell had designed STEC into their higher end Mini and it sounds like that business will fade to zero next quarter, presumably replaced by Samsung.  The good news there is the bears can’t use it as a negative catalyst anymore once Dell is no longer a customer.

Despite the rollercoaster ride, I still own some, though not in the size I did at lower prices.

Monday, May 11, 2009

Roundup -- May 11, 2009


NAND contract pricing up 0-12% according to  The chart they posted of 16gb MLC NAND flash contract is pretty misleading.


Here’s the chart zoomed out to put it into some context:


NAND pricing is definitively better over the last several months but their chart misleads by only showing the recent uptrend.


Taiwan Semiconductor is considering a foray into solar panels.


When an advertising company needs to resort to advertising, there may be trouble.  Google is planning a blitz to promote Chrome, their speedy browser.  Uhm – what’s wrong with a web campaign?  What’s the message here, fellas?


Playboy has a really bad idea for an online porn game.


SNL on the stress test results:

I keep meaning to write something up about the stress tests but they seem so bogus I don’t want to lower myself to respond to them.  It’s worth pointing out the WSJ reports the government succumbed to pressure from banks to understate bank vulnerabilities to stress – which begs the question:  what was the point besides to hoodwink investors?

Wednesday, May 6, 2009

Cisco 2Q:2009 results

Reports a nickel better on a negligible revenue beat.  Guides to down 17-20% – street is down 19%ish… so modestly better.  Commentary perhaps more important – customers saying they’re seeing a bottom and feeling better about stability… but that they’re at significantly lower levels.  Though this is a change from prior quarter commentaries that business was eroding and there was worldwide economic risk, it’s not exactly a shot across the bow of recovery.

Stock was up a buck on the # and has come back in to flat.  Call still ongoing.

Cisco ( $CSCO ) Cheat Sheet – 2Q:2009

Cisco reports tonight.  Here’s the quick and dirty consensus:






Income Statement










    Gross Margin (%)










    Operating Profit










    Pre-tax Profit





    Net Income





And an earnings preview (cribbed from an alert service):

Company is scheduled to report third quarter results tomorrow after the market closes. Reuters is $0.25/$8.13B; guidance was for a revenue decline of 15-20% y/y, implying a range of $7.83-8.32B. The Street is generally looking for an in-line quarter, though several previews note the potential for modest EPS upside even if the top line were to be light. Order trends will be a focus to see if the company has experienced the relative stability over the past 6-8 weeks that has been referenced by many tech peers throughout earnings season. Margins and expense controls will also be closely watched as the company is expected to have managed costs well in the muted demand environment. Consensus (10-15 estimates) for selected metrics:

  • Product revenue $6.46B
  • Services revenue $1.63B
  • Non-GAAP gross margin 63.2%; guidance was for 63%

As is typically the case, guidance and Chambers' comments that frame the outlook will likely dictate the market's reaction. Gauging expectations is more difficult than usual this quarter as while there are no calls for upside proper, several previews note that current consensus for a 2% sequential increase is very beatable heading into the strong fourth quarter; further, there were several out-quarter estimate bumps included in the deluge of previews. In sum, while upside is not necessarily "expected" in this environment, anything less than bracketing the consensus along with relatively constructive comments about the environment from Chambers may be viewed as a disappointment. Given CSCO's wide footprint, geographical breadth, Chambers' willingness to provide details and its spot at the front of April-reporting companies, tomorrow's call could potentially go a long way toward dictating tech sentiment over the near term.

I don’t like Cisco at 15* estimates of $1.25 for this year.  They’re shrinking and the stock is trading at the upper end of the company’s “12-15% long-term growth rate” guidance, which is total garbage too and needs to come down.  Very well managed company… likely to do a large acquisition at some point.  Too much of a macro buy tech kind of bet for me… which is probably exactly why its working.  Macro calls are driving this market.

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