Tech Roundup Reload – January 9, 2009

Everyone met with Nvidia and came away cautious. Weisel said while desktop remains very weak and while a preannouncement would not surprise, the prospects of a loss for the quarter may not be in the shares. Lehman said the quarter could be down 15-20%, worse than the company's projection of down 5%. Nvidia is Taiwan Semi's largest customer – 9% of last quarter's sales (Connexiti) – as discussed earlier, Taiwan Semi saw huge downticks in business. Nvidia is shortable here in my opinion.

Best Buy same store sales came in down 6.5% which is towards the lower end of analyst expectations. They narrow their FY2009 forecast for earnings closer to the midpoint of prior guidance -- $2.30 - $2.90 goes to $2.50 - $2.70. Entertainment software sales were down 12.2% y/y – video games showed a single digit decline. Appliances were down 24.5%. Home office sales were up 6.5%, led by notebooks up 10-12% (hey, a positive PC datapoint!). Consumer electronics dropped 8.7% -- mobile phones and flat panel televisions grew but were offset by declines in digital cameras and mp3 players. GPS systems were up double digits in units but poor pricing led to lower year on year sales. Best Buy will see increased market share gains over the coming year as Circuit City dissolves. As business conditions improve, their pricing leverage will be more apparent without Circuit City's advertising circulars holding it down. I like Best Buy longer-term.