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Friday, January 2, 2009

Orange may pull Blackberry Bold from line-up

Due to persistent problems with the device, Orange may pull it from their line-up. Article cites high return rates, dropped calls and poor reception. The article also cites issues with the Blackberry Storm. Lastly, there is suggestion of a touchscreen Bold due in 1H:2009 codenamed Pluto. Wow, dropped calls, poor reception, and slow, buggy software. I can't wait!

Article is here.

Tech Roundup – January 2, 2009

DisplaySearch issued a report suggesting LCD panel prices will be flat in January. Some panel makers are pushing through $3-5 price increases in 18.5 and 19 inch monitor panels and 22 inch panels are in tight supply. Utilization is low with further production cuts planned and supply chain inventories are low due to inventory reductions. Panel makers are presently producing below cost and refusing to take on inventory without firm customer commitments. The Taiwan government has expressed a commitment to support the panel industry. The report rallied LG Display 11% overseas. It's pretty tough to push sustainable price increases through without a pick-up in demand, which the panel industry lacks right now -- follow through in the stocks over the coming poor earnings reports in consumer electronics may be elusive.
Expect LPL (the ADR for LG Display) to play catch-up and Corning (GLW) to rally today.

Chinese mobile operators China Mobile (CHL), China Unicom (CHU) and China Telecom (CHA) rallied on approval of the issuance of long-awaited 3G licenses. The Ministry of Industry of Information has previously suggested licenses would be issued in early 2009. ZTE rallied 17% overseas as they have picked up half of the equipment sales there so far.
Qualcomm (QCOM) is likely to be the primary equipment beneficiary here.

AllthingsD cites surveys from Comscore (SCOR) and privately held Mercent that e-commerce sales rose sharply a couple of days before Christmas and then died. According to Comscore, overall spending for the quarter was down 4%, the first year over year declines for e-commerce vendors since the survey began in 2001 and probably ever. Amazon registered a mid-single digit rise in holiday sales (the company has guided to 6 – 7 billion for Q4, a rise of between 5.7 and 23.4% -- the street consensus is for a 14% rise to ~6.48 billion) – the low end of their guidance would be a disappointment. Both survey houses seem in agreement that eBay has seen no post-holiday pickup. In years past, eBay has seen business increase as people offload unwanted gifts and bargain hunt after the holidays – not so this year it seems. According to Comscore, eBay also saw its number of unique users drop 4% y/y.
Amazon is by far the most expensive stock in the retail universe and vulnerable to post-holiday blues.

Morgan Keegan says Apple (AAPL) will have gross margins closer to 33% in 2009 versus company guidance of ~30%. Weakness in component prices of DRAM, NAND flash, notebook panels and hard drives are the driver of the increased margin assumption. Their December quarter revenue estimate goes from 10.2 billion to 10 billion but their GAAP EPS estimate rises to $1.45 from $1.40 and their FY2009 estimate goes from $37.9 billion to $36.4 billion, GAAP EPS from $5.02 to $4.92. Their rating remains market perform. This isn't much of a call but there isn't much to work with out there today.

Piper clips numbers on a series of single digit solar stocks (ESLR, CSIQ, LDK, SOL, SOLR), citing limited order visibility in Germany and none in other markets. Germany is holding up better than most but are rooftop installations and as such very turns-based. He prefers YGE due to Germany exposure and FSLR due to their lower panel pricing relative to silicon-based solar modules. Tight credit conditions have virtually shut down business for smaller solar suppliers in most geographies (and probably slowed it substantially for the larger ones, though he doesn't take a shot at estimates there). He says US solar roll-outs won't really happen in 2009. The group remains a "call on credit" in his opinion.
Crude oil at $45 down from $150 with credit shut down makes the sensibility of solar investment suspect.

Amazon (AMZN) was named to the S&P 100 to replace Merrill Lynch.


Tuesday, December 30, 2008

Tech rundown – December 30, 2008

Broadband – WSJ discusses cable industry lobbying for new definition of broadband speeds for tax credits and stimulus grants. The cable industry, which can easily deploy DOCSIS 3.0 equipment on their existing infrastructure, wants the definition of broadband to be 40-50 megabits per second. The telco providers of DSL not so much – they would have to do significant upgrades to compete. Cable wants to be incentivized to build out rural areas where there are fewer operators (and more opportunity to price gouge). The article suggests Clearwire (CLWR) would benefit if the government moved wireless broadband definitions over 2 megabits per second as Wimax can do 2-4 megabits per second. Prime beneficiaries of a massive broadband upgrade in cable would be Cisco (CSCO) and Arris (ARRS). Theoretically it would also benefit fiber to the home players like ADC Telecom (ADCT) as FIOS is compliant with the broadband speed ranges discussed. Another proposal in discussion is for state and municipalities to build the networks and open them up to service providers – a terrible idea, in my opinion.

India delayed their 3G bandwidth auction by 15 days apparently due to lukewarm response. Applications are now due on January 20th so get your forms in now.

FBR says distributor chip shipments fell 27% m/m in November – the 5 year historical average is down 1.5% m/m. Distributors have been cutting back shipments to poorly capitalized whitebox makers due to ability to pay concerns. TXN, MSCC and AMD saw large downward revisions due to their "sell-in" revenue recognition. NAND flash is perceived to be better positioned than DRAM due to its exposure to netbooks, smartphones and game consoles. Despite the order cuts, distributor inventories look to rise to 60 days on hand versus desired levels of 40-45 days. Nonetheless, FBR believes January will have a more historically normal sequential change (though off significantly lower levels than in years past) and that inventory replenishment could begin in the summer of 09 – a dubious conclusion as they just told you inventories are 35% higher than distributors would like presently. They like ONNN, MRVL, MSCC, SLAB, IRF, BRCM, FCS and ATML.

TSM/UMC – UDN ( reports utilization rates at TSM and UMC will drop below 50% and 30% respectively in January due to a combo of Lunar New Year days off and lousy demand.

SYNA – Thinkequity foresees the notebook touchpad market becoming more competitive as netbooks become the dominant market share driver in the market. Taiwanese notebook ODMs will report December figures next week and forecasts suggest they were down 15-20% m/m. Order cuts have been coming through the supply chain all through November and December and consequently Think says Taiwanese ODMs expect January shipments will be down 30% m/m from December's depressed levels. On top of these lowered unit volumes, Elan has been taking share in netbooks – they're in 80% of the Asustek models (the EEE PC). In PCs, netbooks are the top sellers at Amazon and Walmart. With Elan starting to get meaningful volumes and Cypress getting some design wins, Think believes there will be increased competition in notebook touchpads – previously it has been a duopoly of Synaptics and Alps. Though Synaptics has been successful in touchscreen cell phones and that market is robust, Think sees the proliferation of iPhones to Walmart as reducing Synaptics' potential gains as they're not in the iPhone (this is flimsy). The stock trades at 11* his $1.52 estimate – historically the stock has traded in a 10-25* EPS band.

AAPL – Macworld is next week. Kaufman says look for new desktop Macs and possibly updates to Apple TV and/or Time Capsule.

AMZN – Lazard says Amazon maintained market share at the expense of profit margins and reiterate their below consensus EPS expectations for the quarter. Amazon is the most expensive retailer on many valuation metrics and a hit to profit margins would not be taken well by investors.

Monday, December 29, 2008

Samsung doesn't like to pay royalties

As the company is the biggest royalty customer for both Qualcomm and Sandisk, who can blame them.

According to an article in the eetimes, Samsung is developing their own "4g" chips. These are chips for WiMax and LTE (long term evolution) which are wireless broadband technologies on the come. Samsung has done this before -- with 3G in fact. They said they were going to make their own chips, they did, they used it as a negotiating chip with Qualcomm to get their royalty rates lowered somewhat.

It's not much of a direct threat to Qualcomm at present, though the stock tends to get turbulent when people start thinking about the impact of a 20+% customer paying them less. Samsung is sending a message to Qualcomm that they're expecting to pay lower royalty rates in the future.

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