Cell Phone Stocks Soar as Street Sees Signs of Recovery

Shares of companies in the mobile phone sector are staging a furious rally Tuesday, with many companies up by 10% or more, on some hints from the industry that demand might be bottoming. Here are a few factors contributing to the more bullish tone:

• Texas Instruments (TXN) Monday night narrowed its Q1 guidance range. The post-earnings conference call was hardly bullish, but TXN VP for investor relations Ron Slaymaker did say that the company’s wireless business is doing a little better than expected, and that “the handset number came up a little bit relative to our initial expectation.”
• According to a research note from Raymond James analyst Todd Koffman, executives from RF Micro Devices (RFMD) speaking at the Raymond James conference in Orlando Monday said that handset demand has strengthened in the current quarter, with February stronger than January, and January stronger than December. The company indicated that it expects rapid improvement in capacity utilization, which was at just 25% in early March.
• Cowen analyst Matthew Hoffman in a research note Tuesday morning pointed pointed to three data point that may have led investors to conclude that the deterioration of the handset market has slowed. One of those was the comments from Texas Instruments. Another positive, he says, is a report that subscriber growth for handsets in India showed record growth in January, with 15 million net new subscribers. That is particularly good for Nokia (NOK), which he ntoes has 55% of the market for handsets there. Finally, he also notes that HTC reportedly is maintaining its Q1 guidance for flat shipments versus the fourth quarter, and that the company is suggesting March shipments will be up from February.
• Bernstein Research analyst Pierre Ferragu Tuesday penned a bullish note on Nokia, asserting that the stock is priced for a “handset commoditization” scenario which he does not believe will play out. While he says the company has lost the “super high end” of the market for good to Research In Motion, Apple and others, Ferragu says that the company is improving its portfolio for the rest of the market. He thinks Q2 numbers will start to show improvement, mostly driven by “channel de-stocking.”
• Other factors: recent bullish forecast revisions from Diodes (DIOD), Xilinx (XLNX) and Altera (ALTR), as well as upbeat news from contract manufacturers Taiwan Semiconductor (TSM) and UMC.

Add it all up, and you get a recipe for a rally. In Tuesday’s trading:

• Nokia (NOK) is up 92 cents, or 10.5%, to $9.68.
• Palm (PALM) is up 64 cents, or 10.6%, to $6.66.
• Apple (AAPL) is up $5.68, or 6.8%, to $88.79.
• Research In Motion (RIMM) is up $3.42, or 9.7%, to $38.67.
• Texas Instruments (TXN) is up 89 cents, or 6.1%, to $15.58.
• RF Micro Devices (RFMD) is up 14 cents, or 17.5%, to 94 cents.
• Skyworks Solutions (SWKS) is up 56 cents, or 8.1%, to $7.51.
• Motorola (MOT) is up 20 cents, or 6.4%, to $3.32.

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Comments

[Spook:]

In Taiwan, UMC is up yesterday, TSMC down, FoxConn (manufacturer of iPhone) is down, HTC is also down.

Market open an hour ago, UMC is up, TSMC is up, Foxconn flat, and HTC up.

Mar 10 09:54 PM

[brewer:]

Apple is the clear leader here, but Wallstreet is still scared and confused by them. It took the iPod about three years to achieve real dominance. The iPhone has been out less than two years.

Mar 11 03:39 AM

[htcup:]

htc is being used by many vendors with new releases coming

Jul 04 09:25 PM

[justin Liu:]

Now FoxConn (manufacturer of iPhone) in Shenzhen China

Jul 16 12:07 AM