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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.

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