Memory Commentary and Stock Updates

 |  Includes: AMD, DELL, FFIV, GTW, HPQ, NOK
by: Avi Cohen

F5 Networks (NASDAQ:FFIV)

Enterprise Spending

Another tidbit we wanted to relay with regard to recent changes in enterprise spending and specifically over at F5 Networks. We are hearing from contacts that FFIV has placed a freeze on hiring. This comes after the company pre-released on Oct 7th its 4Q08 earnings (FFIV now expects revenues to be $171.43 M, slightly below guided range of $174M.) While not a surprise this is further evidence of a slowdown on the enterprise side (FFIV makes network load balancing equipment).

Advanced Micro Devices (NYSE:AMD) Q3 Review

Better Than Anticipated, But Is It Sustainable?

AMD posted Q3 rev of $1.78B (+32% Q/Q) and an EPS profit of $0.13, including one-time $191MM process technology licensing rev associated with the tool sale last quarter, ahead of consensus as well as our estimates. Backing out the impact of one-time licensing, we estimate pro forma Q3 results would have been $1.59B (+18% Q/Q)/loss of $(0.18), still better than expectations but much closer to our estimate as well as consensus.

Management is cautious (similar to Intel (NASDAQ:INTC)) in guiding to a flattish Q/Q Q4 rev (which implies top-line in the $1.60B range). We are adjusting our ests for Q4 to $1.60B (flattish Q/Q)/loss of $(0.17) with margins largely flat sequentially at 45.3%. Our ests for CY:08 and CY:09 are now $6.04B (flat Y/Y)/loss of $(1.46) and $6.22B (+3% Y/Y)/loss of $(0.86), respectively. We will likely revise our estimates following AMD’s analyst day in about a month.

While we think things are gradually improving at AMD (mostly driven by ATI) our other concerns with AMD remain, thus our neutral stance. Though we believe that recent news regarding “asset-lite” has positive implications on AMD’s balance sheet and removes much of our liquidity concerns, it changes little what we view to be a lack of competitiveness relative to INTC on the product front as well as the fact that AMD is currently behind in rolling out 45nm process technology which has a negative impact on its margins. On the call management outlined its very aggressive transition to 45nm but it remains to be seen how well they can execute given its manufacturing track record. It’s real important that it doesn’t run into any major glitch similar to what happened to Barcelona or it will risk running further behind INTC.

Nokia (NYSE:NOK) 3Q08 Review

Key Takeaways

  • Revenue of €12.239B missed the Avian/consensus forecast of €12.794B/€12.936B
  • EPS of €0.33 in-line with both Avian/consensus at €0.33
  • Top-line shortfall due to lower revenue in Devices (units and ASP modestly below) and at NSN
  • Top-line shortfall offset by better gross margin (35.7% versus Avian 34.4%, consensus 34.2%) and lower OpEx
  • Devices & Services gross margin of 36.5% 100bps ahead of our forecast
  • Company outlook implies industry unit sell-in of 352mm (+13.5% q/q) in 4Q08 – in-line with our 350mm forecast
  • Company sees market share flat to up into 4Q08
  • Ramp of N96, N85, N79, and 5800 Tube, coupled with continued momentum of E71 and 6220, should drive improved high-end portfolio in 4Q08 – supportive to market share, ASP, and margins
  • Net-net tough quarter but not as bad as many may have feared – top-line weakness offset by impressive gross margins and OpEx control
  • We are lowering our revenue estimates for 4Q08 and 2009; however, due to higher gross margin/lower OpEx assumptions our EPS estimate for 4Q08 is unchanged while we are modestly raising our 2009 EPS estimate
  • Maintain Positive rating on shares of Nokia based on attractive valuation (8x 2009 EPS, 5.1x EV/EBITDA, 0.8x EV/sales, 4.6% dividend yield), solid balance sheet, and sustainable competitive advantages. However, in the near term we do not see much in the way of catalysts to drive shares materially higher in the face of negative macro-economic news-flow and data points.
  • Our €17 price target is derived based on our conservative DCF analysis and equates to 12x our 2009 EPS estimate (7.6x EV/EBITDA, 1.3x EV/sales)
  • As a reminder, Nokia will hold its annual Capital Markets Day on December 4 in New York City

Sony-Ericsson 3Q08 Results

Sony-Ericsson eported 3Q08 results this morning. Unit sell-in came in at 25.7mm, up 5% sequentially and implying 20bps of market share gain versus 2Q08. ASP was down 5% q/q to €109 from €116. Lower ASP was likely a result of inventory clearing by SEMC in several markets as well as aggressive pricing from several competitors (Samsung primarily, Motorola in Latin America). Gross margin declined 100bps q/q while the company continues to operate close to breakeven (0% operating margin excluding restructuring). For the quarter, we believe SEMC (+20bps) along with Samsung (+170bps), Apple (+130bps), RIM (+20bps), Palm (+10bps), and HTC (+10bps) were sequential share gainers while Nokia (-230bps) and LG (-120bps) were share losers. The modest net difference (~10bps) will be made up by Motorola (reports 10/30) and the remaining tier-2 vendors.

PC Pricing Weekly Commentary


  • Inspiron 530s – Instant Savings of $80.00
  • Inspiron 530 – Instant Savings of $100.00
  • XPS 420 – Instant Savings of $508.00
  • Only McAfee is offered on the XPS models. McAfee, Trend Micro, and Norton are offered on all other models.
  • Inspiron 1525 – Instant Savings of $304.00


a6600z – Special offers and deals:

  • Free 500GB hard drive upgrade ($50 value) from 320GB hard drive

a6660t – Save up to $319 instantly (on customizable models) offer includes:

  • $100 instant rebate
  • Free 2 Business Days shipping ($69 value)
  • $50 instant rebate on LCD monitors
  • Free 750GB hard drive upgrade ($50 value) from 500GB hard drive

m9400t – Save up to $318 instantly (on customizable models) offer includes:

  • $100 instant rebate
  • FREE upgrade from 3GB memory to 4GB ($50 value)
  • FREE Norton Internet Security subscription ($49 value)
  • FREE 2 day business shipping ($69 value)
  • $50 instant rebate on LCD monitors

Dv5t – Save up to $249 instantly (on customizable models) offer includes.

  • $150 instant rebate
  • FREE upgrade to 3GB of memory from 2GB ($50 value)
  • FREE upgrade to 160GB hard drive ($25 value)
  • FREE 2 day shipping ($49 value)

Gateway (GTW):

  • No changes or discounts to report.

Daily Memory Commentary

  • DRAM pricing was flat overnight
  • 128MX8 DDR2 667 remained at $1.10. W/W -8%. M/M -24%.
  • 64MX8 DDR2 667 remained at $0.60. W/W -8%. M/M -20%.
  • 32MX8 DDR 400 remained at $0.80. W/W 0%. M/M 0%.
  • NAND pricing was flat to down overnight
  • 16Gb MLC remained at $2.25. W/W 2%. M/M -6%.
  • 16Gb SLC fell to $11.30. W/W -5%. M/M -11%.
  • 8Gb MLC remained at $1.50. W/W 0%. M/M -3%.
  • 8Gb SLC fell to $4.75. W/W -1%. M/M -4%.