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Friday, January 9, 2009

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.



Tech Roundup – January 9, 2009

Taiwan Semiconductor (TSM) released December sales – they were down 54.8% y/y. Directionally not surprising but the severity of the contraction in the Asian supply chain is profound. UMC had similarly bad sales trends to report the prior evening – down 45.5%.

Memory prices were basically flat last night. Avian made a call yesterday afternoon negative on memory stocks, saying there were no indications that demand was improving despite the spot market rallies.

LG Display's (LPL) CEO told a crowd of reporters at CES that LCD performance and price outlook is improving. "It seems like consumers are slowly recovering from the initial shock from the economic downturn. Some suppliers are experiencing a shortage of TV panels," he said. This echoes DisplaySearch's comments late last week and is not new information.
Sony indicated better LCD sales than expectations. Hitachi said their LCD sales were worse and they'll miss their target but they're a bit player in the market.
Panasonic said they will slash spending on flat panel television manufacture by 1.5 billion (down 23%) but still intends to sell 15.5 million (up 50%) sets this year.
Tokyo Electron announced orders were down 65% in the December quarter. Semi orders dropped 55% -- solar and flat panel orders were down an astounding 98%.

PALM rocketed 35% yesterday after showing its newest phone running on its new Linux-based operating system. With a retractable qwerty keyboard, a full browser, and a multi-touch screen, Palm has a credible offering to fend off obscurity. The phone will not ship until later this year.

While Palm's phone looks great, its likely to be expensive to manufacture for Palm – note that neither RIM nor Apple ships a phone with a touchscreen AND a keyboard. The Pre's bill of materials is likely to be the highest in the cell phone industry. Palm has significantly smaller scale and resources and will not get the same kind of operating leverage buying parts that Apple and Research in Motion get. Palm has not disclosed pricing but they have said they will price it competitively with the other offerings in the market – $200 is a paltry ASP relative to the bill of materials. Without revenue sharing agreements or substantial subsidies from Sprint, it is unlikely they will recoup much on the cost side. Apple was able to extract hefty fees from AT&T for exclusivity on the iPhone which ultimately led to leverage in negotiations with other carriers worldwide who were dying to latch onto Apple's hot streak. Palm, on the other hand, is a one-trick pony and this is their last chance to avoid the slaughterhouse. They will not have the same kind of negotiating leverage to extract substantial revenue from carriers in exchange for the right to sell the phone that Apple had. The rest of Palm's line looks pretty shoddy relative to the Pre and likely erodes as anticipation of the new phone builds.
Short interest in Palm shares is a dangerous 35% of the shares outstanding and the stock will probably not come in much as a result – pained short covering will prop it up on weakness. Palm stock is likely to remain volatile with an upward bias but Palm's future is anything but certain. The Pre should enjoy very brisk sales at $200 but the more important issue will be how much they're making… or losing… on each unit, and that won't be known for a while.

Ballmer indicated he was open to a deal for Yahoo's search assets – this is the first indication he has shown that he is interested in any kind of transaction with Yahoo since walking away from the company several months ago. Yahoo is sucky yet stable. Shareholders and analysts want Yahoo to do something with Microsoft. Yahoo will be forced to engage in talks with Microsoft once again – expect speculation to continue to bubble and froth in the stock. I think Yahoo is a trading buy here.

There may be a part 2 this morning. Check back before the opening.

Thursday, January 8, 2009

Tech Roundup – January 8, 2009

NAND flash spot prices retreated slightly with 8gb and 16gb MLC trading off ~4%. DRAM contract prices for 1H January were posted with zero change from the previous 2 weeks. As Nanya and Samsung had publicly discussed price hikes, this is somewhat surprising. It's tough to push price hikes through with demand not there to back it up.
Powerchip, a struggling Taiwanese DRAM manufacturer, submitted an aid request to the government. They remain opposed to consolidation which is in opposition to the government's preference. As Powerchip is on the brink of failing, its unlikely they will ultimately have much of a choice in the matter – expect them to be shotgun wedded to another player.

ThinkEquity expects Intel's Q1 guidance to represent the bottom in downward revisions. He has a 54 cent estimate for 2009. Consensus is 71 cents. Jeffries believes Q1 guidance will be down 15-20% q/q and lowers his revenue estimate to $6.84 bil. His revenue estimate for the full year is 10% below the street and his 09 earnings estimate goes to 63 cents. Intel will shrink by 15-20% this year and the stock sports a P/E far in excess of 20* on even the most optimistic estimates. The stock belongs $10-12.

Lenovo issued a profit warning. Shares plunged. Global PC demand is poor.

HONG KONG, Jan 8 (Reuters) - Lenovo Group <0992.HK>, the world's no. 4 personal computer vendor, said on Thursday it was likely to incur a material loss for the three months ended in December 2008 and would cut staff by about 11 percent to reduce costs. The potential loss was due to unprecedented global economic challenges reducing demand for personal computers, the company said in a filing to Hong Kong bourse. Lenovo also announced a plan to cut 2,500 employees worldwide, or 11 percent of its total workforce, as part of an effort to realise annual savings of $300 million for the year ending in March 2010. The company said it would incur a pre-tax restructuring charge of about $150 million for financial year 2008/09, which would be largely reflected in the fourth quarter of the year ending in March 2009.

Taiwan's UMC Corp, a major foundry for worldwide semiconductor production, announced sales dropped 45.5% y/y in December. This is somewhat worse than expectations but reflects the well-known contraction in semiconductor orders. Foundries are an important bogey to watch for an upturn as they'll see business improve when chip inventories get too low. No sign of that so far!

EMC Corp preannounced revenues slightly above the street consensus. Non-GAAP EPS looks in-line. EMC is likely to outperform near-term relative to tech in general. Generally, online storage is becoming more pervasive as bandwidth speeds have grown. Pushes to so-called cloud computing by most major technology vendors (MSFT, GOOG, AAPL, IBM) will continue to bolster ongoing storage needs. EMC has been showing good cost controls and operating leverage under its present management, remains a potential acquisition target and probably ought to be a core holding.

Microsoft (MSFT) has been aggressively cutting search deals. Yesterday it came to light that they had beaten Google (GOOG) for the Verizon search deal – beaten is always debatable with deals like this as they come with minimum payment guarantees – this one seems to be $550 mil over 5 years. Microsoft also won Dell's search business – several years ago, Google overpaid for the rights to default search settings on Dell computers. More to the point, Microsoft is making it more difficult for Google, regardless of the P&L implications to Microsoft. Google's market share in search significantly dwarfs Microsoft.

FBR pulls the plug on some semicaps. His comments follow:

We are downgrading the semiconductor manufacturing industry as our recent channel checks in Asia, as well as our semiconductor inventory analysis (illustrated inside this report), indicate the recovery in semiconductor manufacturing fundamentals will be slower than currently dialed into Street expectations. Although we were late in 2H08 in downgrading, and actually did not find it prudent to downgrade when stocks hit 52-week lows in November '08, we believe the recent enthusiasm in semiconductor manufacturing stocks and the associated 25% runup in SOX are premature and, thus, are using this occasion as an opportunity to finally downgrade. Our analysis indicates that the semi inventory refresh that typically occurs in the 2Q time frame (every year) will be muted this year since our analysis indicates that forward DOI (throughout the channel) will continue to increase from 3Q08 into 4Q08 as the rate of sell-through continues to track below the rate of sell-in. This is expected to drive forward DOI to above 40 days in 4Q08 and, thus, set a new five-year high. Consequently, the work-down in semi inventory will be longer than what has been experienced in the past few years and, thus, 2Q's inventory refresh will be a muted one. This is expected to push semi manufacturing utilization rates to historical lows in 1Q09. And, although the utilization rates could bottom in 1Q09 since they are at historical lows, it will take more than four quarters for any meaningful improvement to materialize, thus pushing out the rebound in equipment bookings to sometime in CY10 vs. 2H09. Other reasons behind a more muted inventory refresh in 2Q are lack of killer applications, fear of continued excess inventories, and short manufacturing lead times. The downside risk to stocks is considered limited to 20% to 30%; but we do not see any meaningful earnings power in CY10 that would otherwise help sustain the current rally. To that end, we expect semiconductor manufacturing stocks to give back the recent gains and remain in a trading range. We are downgrading AMAT, ASML, FORM, KLAC, TER, and WFR from Outperform to Market Perform and reducing TER's price target from $8 to $6; we reduce WFR's price target from $25 to $21.

Inventory is still growing. Investors seem to be betting on a snapback V shaped recovery. It's not a friendly set-up for stock returns near-term. We'll start to get a sense of inventory levels over the next couple of weeks as companies report. Risk is being priced in, though, and that's good longer-term. Though I've been advocating playing some memory stocks long (SNDK, MU), I don't much care for semicaps at these levels. Memory is still an enormous portion of the semicap revenue base despite all the capacity addition cuts of late.

Gamestop (GME) saw much better holiday sales on the back of better hardware availability (Wii was actually in inventory for a while this quarter, something that pretty much has never happened.) Nintendo shipped more product into the channel this year – almost double what they've had out there. It helped. Gamestop said margins will be somewhat lower as hardware skewed the revenue growth. The stock is a sale into the strength. Though the holidays held up, post-holidays there are no significant catalysts to drive the stock and there may be an air pocket of demand without holiday spending drivers. Prefer Nintendo (NTDOY) in the space -- they continue to take share.


Wednesday, January 7, 2009

Intel (INTC) revises 4Q:2008 forecast lower

Intel lowered its revenue forecast to 8.2 bil from the prior 8.7 - 9.3 bil and consensus of 8.8 bil. Despite the dramatically lower revenue, gross margins will remain in the previously stated range of 55 +/- 2% -- they must be overproducing like mad to keep margins up on that kind of shortfall. Expect significant inventory build at Intel when they report. As most of the rest of the known semi universe lowered a couple of times intra-quarter, Intel's guidance is somewhat expected. Despite that expectation, Intel trades at a relatively lofty valuation for a company that still hasn't eclipsed its 2005 annual sales results. This is not a growth stock and its quickly becoming a shrink stock and yet it continues to trade with a premium multiple. I don't think that can last in a more frugal economic environment.

I'm short some (you could probably tell).

Tech Roundup – January 7, 2009

Taiwan did an emergency interest rate cut of 50 bps following export data showing a 42% decline. Exports to China including Hong Kong were down 54%. Electronics shipments were down 43% y/y in December, their worst fall on record.

China officially awarded 3G licenses to China Mobile for TD-SCDMA, China Telecom for CDMA2000 and China Unicom for WCDMA. All three fell on profit taking.

Satyam's CEO resigned, confessing to fraud that has inflated reported profits for several years. "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions", disclosed the now former chairman B. Ramalinga Raju in a letter to the board of directors. Last month, Satyam shares were pummeled when the Chairman tried to acquire family-owned businesses in utterly unrelated industries with company shares. This was an effort to bury the fraud according to Ragu's letter.
There's more pummeling ahead – the stock was off 80% during regular session trading in India. Satyam has been dubbed "India's Enron" in a dozen reports so far this morning. As Enron created widespread nervousness about truth in corporate reporting, Satyam's competitors may find themselves losing business to IBM as their long-standing reputation as a pillar of industry will attract nervous customers in need of services.

Memory price increases spread to NAND flash. Contract pricing for the first half of January was revealed to be significantly higher than the prior month yet still below spot prices in most cases. MLC contract prices rose 15-20% in 8gb and 16gb. NAND spot continued its ascent with 8gb rising 20%, 16gb up 6% and 32gb up 4%. (prices are somewhat rounded and quotes vary as the spread is wide and the market disparate). A 1 year chart of MLC 8gb NAND spot prices is above to give some perspective. DRAM spot prices were also up in the mid to high single digits overnight.

UBS upgrades Micron buy from neutral on expectations that lower DRAM output across the industry will drive further price stability despite government bailout capital keeping underperforming capacity alive.

The rally in memory stocks reflects anticipated order recovery and higher speculative spot prices. It remains to be seen whether companies can raise prices without demand following. Sandisk (SNDK) looks like its going to $13.80. Micron (MU) may have room up to $5 but I will be making sales today anyway.

Baidu, Google and 17 other websites apologized to the Chinese people for failing to block pornography more effectively, the Xinhua news agency reported. The Ministry of Public Safety recently launched an investigation. The WSJ also ran a story about Baidu's shill search results and its likely longer-term effects on the credibility of the company as an information portal and an advertising partner. Baidu's share of the Chinese market is unsustainable at ~63% and vulnerable to market share losses. Baidu likely has substantially more downside.

Apple (AAPL) continues to trade lower as others were as bored as I was with their product rollouts at Macworld. Furthermore, the media continues to speculate on Jobs' health. Hormone imbalances can be caused by a wide variety of factors. Yesterday the LA Times pointed out cancer is one of those factors. The stock continues to act very doggy. Rising NAND prices are negative cost input for Apple's Nano should the hikes stick.


Tuesday, January 6, 2009

Rogers sees drop off in iPhone sales

TORONTO, Jan 6 (Reuters) - Shares of telecom and media
group Rogers Communications Inc <RCIb.TO> fell almost 6 percent
on Tuesday after the company posted slumping iPhone sales and
flat postpaid wireless subscriber growth in the fourth quarter
and said its cable results are being hurt by a tough economy.
    Rogers, which owns Canada's biggest wireless carrier, said
it added 199,000 net wireless subscribers in the traditionally
strong quarter ended Dec. 31, up from 183,000 a year earlier.
    The company said it sold about 130,000 of Apple Inc's
<AAPL.O> iPhones in the quarter. Jonathan Allen, an analyst at
RBC Dominion Securities, said this was a "sharp drop" from
255,000 in the third quarter.

I missed that earlier… probably because MacWorld made me sooo bored I could barely keep my eyes open.

Blowups – January 6th, 2009

Standard Microsystems (SMSC) met revenue expectations of $84 mil for the current quarter and EPS were a dime better. Outlook of 45-51 mil and a loss of 40-50 cents are significantly below consensus of 76 mil of revenues and 15 cents of EPS. Standard Microsystems' main foundry partner is Taiwan Semiconductor (TSM) and their customers in excess of 5% are Yosun Industrial (TW.2403) at 24%, Avnet (AVT) 9% and Arrow Electronics (ARW) at 8% (Connexiti).

F5 Networks (FFIV) preannounced lower revenues than prior guidance. The quarter will come in around $166 mil, prior guidance was $172-174 mil. North American business failed to close at the end of December, driving the shortfall. Flextronics is FFIV's primary contract manufacturer. Avnet (AVT), Ingram Micro (IM) and Tech Data (TECD) are their main distributors in North America (Connexiti).

Microchip (MCHP) guides down 30% sequentially, which would be roughly 188 mil. The street is at 230 mil. EPS will be 23-26 cents versus the street at 32 cents.

In the interest of timeliness, I'm going to post this and revise it afterward if necessary.

Sandisk (SNDK) trendlines cross at $13.80

MacWorld basically over

They showed a new 17" Macbook, a bunch of software, said they'll be beta testing "", an online office application that will compete with Google Docs.

They unveiled new tiered pricing for iTunes, $.69 for bad DRM songs, $.99 for DRM protected good songs and $1.29 for higher encoding DRM-free.

I think the iPhone can download music directly now.

More significantly, they did not refresh any of the hardware lines as expected nor did they show a new operating system revision.

The stock probably goes down.

(I'm short some.)

Most. Boring. MacWorld. Ever.

An hour on iLife and iWork so far. Falling asleep at my desk. Help.

MacWorld Expo keynote live blog links

Why this isn't just webcast I don't know but here are some of the links to outlets broadcasting from inside MacWorld at noon EST:

Apple Gazette
Ars Technica
The Mac Observer

Tech Roundup – January 6, 2009

China's Ministry of Public Security and six other government agencies have launched a program to crack down on "unhealthy content" (porn) on leading Chinese websites. While the health benefits of pornography are debatable, historically Chinese crackdowns on service providers have led to fines, tariffs, restricted growth opportunities and significant stock price contraction. Baidu (BIDU) is China's largest search portal, followed by Google (GOOG). SOHU and SINA are also exposed. Baidu (BIDU) looks like a short into strength.

DRAM prices shot ~5% higher as speculation of Samsung capex cuts spread from the Korea Times to the spot brokers. MLC flash was up even more – as much as 12% in 16gb. Samsung indicated they will raise DRAM contract price slightly for the first half of January. Nanya stated they intend to raise prices 10%. If successful, this will be the first price hike since June. Still like Micron (MU) on better short-term DRAM trend and likelihood of Taiwan bailout funds via Nanya JV application. Sandisk (SNDK) likely to continue to rally to ~14 according to the chart.

SMIC (SMI) is discussing a strategic stake sale to Intel according to unnamed Reuters sources. The stock is up over 100% in the last month.

Microsoft (MSFT) said they've sold over 28 million xbox 360 units in total since its 2005 launch. They sold 10.4 million by end of 2006, 17.7 million by end of 2007, 28 million by end of 2008. The price of the xbox 360 has dropped 60% since its launch. Last year less xbox units were sold than its first year. The platform is consistently losing momentum and is a big top line contributor in the December quarter. Analysts seem resolved to a revenue shortfall from Microsoft this quarter. Makes sense.

Oppenheimer upgrades Apple (AAPL) on reduced uncertainty about the health of Steve Jobs. Technically the stock looks like a sale at ~99.

Emulex preannounced a shortfall for the current quarter – revenues will be 107-108 million vs. prior guidance of 111-116 million. Goldman Sachs downgrades. Emulex derived 28% of sales from IBM, 15% of sales from HPQ and 7.25% of sales from Dell last quarter according to Connexiti.

Morgan Keegan is positive on Arris (ARRS), expecting the company to beat consensus slightly on better margins from CMTS (broadband equipment). They expect guidance to be in-line and that Arris will outgrow many of its peers due to further rollouts of DOCSIS 3.0 and HD at cable operators. Valuation is attractive with CY09 P/E near 8x.

UBS upgrades BMC. 70-75% of revenues come from the deferred revenue line, 55% of overall revenues come from maintenance of existing customers. Mainframe software is less susceptible to spending cuts as mission critical applications run on it. They don't believe there is significant downside risk to estimates. UBS also says consensus estimates for Autodesk (ADSK) and VMWare (VMW) are too high. In the case of Autodesk, 67% of company sales are tied to building and manufacturing and sales are calculated on a "per seat" basis. As job cuts in these industries are ongoing, estimates are vulnerable.

CSFB takes their enterprise hardware numbers lower, citing considerably weaker trends in the latter part of December. They expect enterprise spending to freeze further in the March quarter as budgets are in flux and headed lower. Their prior estimates already were discounting a severe recession according to the analyst. Estimates are cut for EMC, IBM, JAVA, NTAP and a couple of others.


Monday, January 5, 2009

Some good points in the Credit Suisse semicap downgrade

Semiconductor equipment stocks have rallied 35% off their lows on anticipation of a trough in orders. Much of the order recovery rally may have occurred already.

Maintenance capex will keep the industry in oversupply. Memory producers need to eliminate capacity, not maintain it, for the market to stabilize.

Foundries can effectively double output from their present 40-45% utilization levels before running into capacity constraints.

Me, not him:

From struggling homeowners to the growing ranks of the unemployed, from the banks to the broke chipmakers, there's going to be a whole lot of focus on getting the most out of existing goods and services and less urgency on increasing capital expenditure.

My belief is in 2009 the trick is going to be squeezing more juice out of the lemon.

Samsung denies capex cuts (like usual)

Samsung denies they'll cut capex. Again. Get it over with, guys.

Out of Sandisk (SNDK).

Sandisk – will sell into strength

Output in NAND being reduced could further benefit spot pricing (which is up 2-5% overnight). Decreases from Samsung, Sandisk's most significant royalty income source, will have a negative effect on profitability. Furthermore, Samsung intends to negotiate royalty arrangements lower with Sandisk over the next few months. There's still near-term chop to come. It's probably appropriate to sell the stock. It looks higher first, I think.

Earnings Estimate Cheat Sheet – Week of January 5, 2009

Estimated Reporting Date


Revenue Estimate Current Q

Operating Profit Estimate Current Q

EPS Estimate Current Q

EBITDA Estimate Current Q

Revenue Estimate Next Q

Sequential Revenue Growth Estimate, Percent

Operating Profit Estimate Next Q

EPS Estimate Next Q

EBITDA Estimate Next Q

Revenue Estimate Full Year

Operating Profit Estimate Full Year

EPS Estimate Full Year

EBITDA Estimate Full Year

Revenue Estimate Next Year

Operating Profit Estimate Next Year

EPS Estimate Next Year

EBITDA Estimate Next Year


























































Letter from Steve Jobs


For the first time in a decade, I'm getting to spend the holiday season

with my family, rather than intensely preparing for a Macworld keynote.

Unfortunately, my decision to have Phil deliver the Macworld keynote set

off another flurry of rumors about my health, with some even publishing

stories of me on my deathbed.

I've decided to share something very personal with the Apple community so

that we can all relax and enjoy the show tomorrow.

As many of you know, I have been losing weight throughout 2008. The reason

has been a mystery to me and my doctors. A few weeks ago, I decided that

getting to the root cause of this and reversing it needed to become my #1


Fortunately, after further testing, my doctors think they have found the

cause -- a hormone imbalance that has been "robbing" me of the proteins my

body needs to be healthy. Sophisticated blood tests have confirmed this


The remedy for this nutritional problem is relatively simple and

straightforward, and I've already begun treatment. But, just like I didn't

lose this much weight and body mass in a week or a month, my doctors expect it

will take me until late this Spring to regain it. I will continue as Apple's

CEO during my recovery.

I have given more than my all to Apple for the past 11 years now. I will

be the first one to step up and tell our Board of Directors if I can no longer

continue to fulfill my duties as Apple's CEO. I hope the Apple community will

support me in my recovery and know that I will always put what is best for

Apple first.

So now I've said more than I wanted to say, and all that I am going to

say, about this.





Barclays upgrades semicaps, Credit Suisse downgrades NVLS; Wachovia upgrades semis

Barclays upgrades semicaps from negative to neutral. He says he thinks capex will drop 50% for the industry and consensus is using down 35% but stocks are attractive on tangible book values. He continues to dislike VRGY, FORM and BRKS. TER gets an upgrade. Many semicaps believe their business is at maintenance levels and that companies can't possibly reduce capex below current levels.

The upturn may remain elusive nonetheless as parts are selling below cash cost across the memory industry and cash is tough to come by with memory maker balance sheets so bloated with debt. I'd rather see some DRAM makers fail before calling a bottom. Taiwan is going to prolong the memory pain by throwing bailout money into the grinder.

Credit Suisse downgrades Novellus on poor operating leverage. No kidding… but uh that's been apparent for over a year. They started missing numbers way before everyone else. Their call has little value add.

Wachovia thinks an inflection point is close in semis. He upgrades only Altera but has buy ratings on ADI, INTC, XLNX, MU and CAMD. His sector rating moves from neutral to overweight. The basic thesis is though chip inventories will continue to rise from 70-75 days at September's quarter end to as high as 90-100 days by the end of the March quarter investors will look past near-term deteriorating fundamentals towards eventual recovery. He believes contract manufacturer and distribution inventory is significantly lower than it was in the downturn of 2001 and says more chip inventory is being held at component makers than in the past several years.

He talks somewhat about peak inventory occurring in the middle of 2001 in the last significant downturn. For what its worth, the semi index was down over 50% by September of the following year. As he doesn't expect inventories to peak until March, his call seems more in line with the recent market move than his thesis.


Samsung FINALLY cuts capex

According to the Korea Times, Samsung intends to cut capex for 2009 "by more than 50 percent". This has been anticipated for several months. This will likely be perceived as positive news for memory stocks like Sandisk (SNDK) and MU (Micron). Micron and Nanya are also officially going to the Taiwanese government with a bailout request of NT $40 - 50 billion (US $1.2 – 1.5 billion).

Samsung has been overproducing memory for a couple of years now. Sheer egotism and girth has kept them spending. Perhaps they thought they could drive some smaller Taiwan players out of business and the impending government intervention in the memory market has made them rethink their strategy. Whatever the cause, they're going to throttle back spending significantly and that's a much needed relief for the memory market.


Tech Horizon – Week of Jan 5, 2009

Big week for tech. Of note:


January 5 - 9, 2009
MacWorld Expo
Moscone Center
San Francisco, CA
Webcast – liveblogs from,

New Apple products perpetually expected. The annual Steve Jobs amateur medical prognosis contest is officially cancelled, however some "media" (other blogs) claim he will make a special guest appearance. Steve is not scheduled as a speaker. Analysts are looking for an iMac refresh, a Mini refresh and yet another operating system upgrade (Snow Leopard). There is speculation of an iPhone nano, a touchscreen Macbook, refreshes to the Apple TV and Time Capsule line.

Philip Schiller, Apple's senior VP of worldwide product marketing, will deliver the keynote at noon on Tuesday.


January 6 - 8, 2009
11TH Annual Needham Growth Stock Conference
New York Palace Hotel
New York, NY
Webcast – (password required)

Just how bad was the December quarter? Bad. Are orders picking up so far in January? Not really. Expect a lot of discussion of how great the second half of 2009 is shaping up as a hundred industry executives will be asked to guess at the slope and timing of the inevitable recovery. Many companies are in their quiet periods and will decline to comment on the current quarter -- they've already preannounced in most cases. Expect emphasis on new product rollouts and cost cutting programs in place. Despite significant order cuts throughout the supply chain, inventories have not improved this quarter – in fact, by some accounts, they have gotten significantly worse.

As government stimulus and Obamamania are potential rays of light and business is so lousy, executives are far more likely to point to the horizon ahead than the muck below. Lunar New Year is in late January and perception is Asian business will be on hold until that holiday ends in early February.

January 6 - 8, 2009
Citigroup 2009 Global Entertainment, Media & Telecommunications Conference
Arizona Biltmore
Phoenix, AZ
Webcast –

Picks into the conference from the analysts include AMT and EQIX.

January 8, 2009
JPMorgan Tech Forum
Las Vegas, NV
Webcast – unlikely


9:00-9:30 am

Nvidia Corp

Michael Hara- VP Investor Relations

12:55-1:25 pm


Jon Olson- CFO

9:35-10:05 am

Brightpoint Inc.

Robert Larkin- CEO, Anthony Boor- CFO

Anurag Gupta- SVP Global Strategy and IR

1:30-2:00 pm

ON Semiconductor

Keith Jackson- CEO, Donald Colvin- CFO

10:10-10:40 am

Dell Inc.

Ron Garriques- President, Global Consumer Group

2:05-2:35 pm

Tech Data Corp

Robert Dutkowsky- CEO, Jeffery Howells, CFO

10:55-11:25 am

Atheros Communications

Jack Lazar- CFO

2:50-3:20 pm

Toshiba American Info Sys

Mark Simmons- President and CEO Jeff Barney- VP and GM Digital Products Grp

11:30-12:00 pm


Jim Burns- VP Investor Relations

3:25-3:55 pm

Micron Technology

Kipp Bedard- VP Investor Relations

12:05-12:35 pm


Enrique Rodriguez- VP Entertainment and Devices,

Zon Ellis- Investor Relations

4:00-4:30 pm


Eric Brandt- Sr. VP and CFO


4:35-5:05 pm

Texas Instruments

Dave Heacock- Sr. VP High Volume Analog Products



January 8 – 11, 2009
International Consumer Electronics Show (CES)
Las Vegas Convention Center, various hotels
Las Vegas, NV
Webcast – unknown

Palm (PALM) will show a phone based on Nova, their new operating system. Recently Elevation Partners upped their investment in the struggling smartphone maker. The short interest in this stock is very high heading into an event and expectations are pretty low for this product. The stock could get interesting as many carriers are fishing around for iPhone substitutes to upgrade existing subscribers to higher margin data plans.

Cisco (CSCO) plans to show new products targeted at consumers – a PC to TV video device, a streaming stereo and a video conferencing product. It is unlikely any of these will have meaningful impact on the share price. Polycom (PLCM) could see share pressure if the video conferencing product has more competitive pricing than Cisco's present high end offerings. Cisco's 2009 estimates still look far too high.

Dell (DELL) is expected to show the "Adamo" – their response to the Macbook Air and the Lenovo Thinkpad X300. Stock impact is unlikely.

Last year's theme was too many mp3 players – there must've been a thousand of them there. This year expect to see too many netbooks and touchscreen cellphones. Both of these product trends benefit Synaptics (SYNA).


Monthly Sales Data:

January 7    AUO        December quarter expected to be down 40% q/q (Digitimes)

UMC        December guidance is for -21% to -29%

    January 9    BBY        December comp estimate is -5% to -15%, consensus is -7.2%

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