Texas Instruments (TXN) said profit rose almost fourfold on the sale of a division. Net income increased to $2.39 billion from $628 million a year earlier. Sales gained 24 percent to $3.69 billion. TI is pushing chip prices lower to make phones affordable in developing countries and is generating profit from processors for the new phones that play music and surf the Web. The order backlog is up and the outlook is for "seasonal growth''. Worldwide shipments of mobile phones should grow 20 percent this year to 956.2 million units, Deutsche Bank estimated in a July 17 note. India will be the fastest-growing market, climbing 80 percent to 56.4 million handsets. Chinese shipments should gain 18 percent to 138.7 million.
SanDisk (SNDK), the world's largest maker of memory cards for portable electronics, said income climbed 36 percent as the company attracted customers with cards that can hold more data. The shares rose 17 percent after results beat analysts' estimates. Profit rose to $95.6 million from $70.5 million a year earlier. Sales rose 40 percent as customers sought cards with more room to store data on mobile phones, the "star performer'' among SanDisk's products this quarter. SanDisk's cards can hold up to eight gigabytes, equal to as much as 2,000 songs or 4,000 pictures.
Citigroup (C) raised its recommendation for Dell (DELL) to "buy''. The bank wrote that while Dell will likely face the issue of a slide in corporate spending for several more quarters, "we believe this is now reflected in estimates.'' Dell's stock dropped 9.9 percent on Friday, the biggest decline in more than five years.
Sunnyvale, California-based Advanced Micro Devices (AMD), the world's second-biggest semiconductor maker, agreed to buy ATI Technologies (ATYT) for $5.4 billion, adding computer-graphics chips to its product lineup. The offer is 24 percent more than ATI's closing price last week. AMD is making the biggest purchase in the company's history and will give AMD a leg up by adding a product that Intel has long offered clients. ATI Tech is the largest maker of computer graphics chips for notebook computers, helping it win more orders from Dell and Hewlett-Packard. Strategically this deal makes sense in the long run but in the short term it's negative as AMD will have a lot on its plate integrating ATI at a time of overcapacity and a fierce price war with Intel. Advanced Micro also plans to attack Intel by spending $1.7 billion on plants and equipment this year and $2.5 billion in 2007. Nvidia and INTC will be the most affected, and we may see them make a competitive bid for ATYT.
Intel (INTC) has begun winning back market share in China from archrival AMD, as it tried to reverse two years of steady losses. Intel is using a two-pronged strategy of lower prices and new products, most notably a new generation of dual-core processors. The strategy began paying off last quarter, with the co winning back 1.5 percentage points of share.
Motorola (MOT) announces $1.2 billion accelerated share buyback and announced an additional $4.5 billion buyback. Technology stocks may be struggling but Motorola is doing the right thing if they believe in their future.
On Friday, Microsoft (MSFT) announced long-rumored year-end introduction of Zune, its music player that copies Apple's iPod. MSFT is great at copying but it trails Apple (AAPL) badly in innovation. MSFT will undoubtedly gain some market share given its huge marketing muscle and ability to sustain losses indefinitely. AAPL should escape relatively unscathed. Zune should enjoy some success because of MSFT's marketing muscle. Windows Media-enabled MP3 players have been in the mkt for 3 years and have been unable to grow their roughly 25% market share.