Rob Black's Tech Stock Report

by: Rob Black
AMD (NYSE:AMD) has selected a site in upstate New York as the likely location for a $3.2 bln chip factory that will create roughly 1000 jobs by 2010. AMD expects to receive about $900 mln in cash incentives from the state, out of total subsidies estimated at $1.2 bln.

Microsoft (NASDAQ:MSFT) is going to get into the business telephone market, including desktop phones and video-conferencing devices as soon as June 2007. The new phones will connect computers so that they can handle voice functions, such as making a phone call and receiving voice mail. Microsoft is taking on giants, such as Cisco, Avaya and Nortel, in the industry march to replace traditional phone systems with more flexible and cheaper Internet technologies.

Finisar (NASDAQ:FNSR) said a jury awarded the company $78.9 million in damages from DirecTV. The jury found that DirecTV and affiliates infringed a Finisar information-transmission patent, Finisar said. Finisar said the case against the El Segundo, Calif., provider of digital television entertainment was heard in U.S. District Court in Beaumont, Texas.

UBS believes that with three vendors soon to control greater than 70% of the wireless infrastructure market, they believe Motorola (MOT) and Nortel (NT) are unlikely to seek greater 2G/3Gscale given weak market position and focus on 4G. Asia may have interest in NT G.S.M./U.M.T.S. assets but have not done large deals historically. Firm believes Ericsson (ERICY) may look to bolster its wireline portfolio in access and I.P. routing/switching. The firm sees Tellabs as a better overall fit than Juniper or Redback. However firm still views such a deal as unlikely at current price levels given potential 2007 EPS dilution.

Kaufman thinks Tivo (NASDAQ:TIVO) could have a volatile week with the settlement phase of its trial with EchoStar scheduled for June 26 through June 28. They would expect shares of Tivo to respond well to the news that EchoStar must pay supplemental and/or enhanced damages. However, they do not think Tivo will prevail in its injunction, and doubt EchoStar will settle. Firm notes Tivo also announced that its interactive ad capabilities were being integrated into the SPEED channel for a pilot program from BMW, and the co released a new version of its desktop software.

CIBC notes that Microsoft's analyst day is on July 27, and they highlight some of the company's recent moves to expand its share of the search market. They note Ray Ozzie kicked it off with his e-mail to MSFT execs last October. Since then, firm notes MSFT has stepped up its commitment in online advertising by acquiring and developing new technology and assets, spending $600 million on Live/MSN, and hiring aggressively. Based on company comments, firm believes Windows Live Search is expected to compete with Google and Yahoo! by closing the relevancy gap and adding the ability to integrate software, to allow the search page to act as an R.S.S. aggregator and data dashboard. They think MSFT could probably pursue a number of strategies, including economic incentives, bounty to PC manufacturers for search pre-installation, and search integration with other MSFT applications, as well as consolidation with Yahoo! to compete against Google. []

Jefferies says checks indicate that Dell (NASDAQ:DELL) may begin shipping desktops based on AMD's Athlon processor in the Sept 2006 quarter. Though this potential desktop at Dell provides a very important psychological win for AMD, firm believes that the gain should be limited because ultimate success of AMD's products will be decided in the marketplace. Firm believes that the battle for market share in the M.P.U. market will intensify. Both INTC and AMD are expected to accelerate spending on R&D and manufacturing while keeping on the price pressure on. Given Intel's edge in manufacturing, advantage should be on Intel's side, at-least in near term. Expect INTC to intensify their C.P.U. price cuts, hence the AMD win will probably result in lower profits for both INTC and AMD. With launch of Conroe, INTC will continue to maintain technological and cost advantages over AMD. Though AMD's Athlon had managed to get an edge over INTC's desktop platform in a few applications, Conroe should once again re-establish INTC's technological lead. Therefore, firm believe that even with access to DELL's channel, gain for AMD is still highly dependent on pricing. []