Listening to the financial news one is tempted to jump into the Pit of Despair: "The eurozone will implode and Worldwide Armageddon will be here before you know it." With all this being said, one would expect the semiconductor companies to be forecasting an equal amount of doom and gloom. Yet a weighted average of 29 semiconductor companies have a combined Q2 sequential revenue guidance of plus 4.7%.
See Individual companies guidance below:
The semis with noteworthy sequential revenue guidance for the second calendar quarter and worth a look are:
Altera makes programmable logic devices and has a sequential 2Q revenue guidance of up 16%. With this guidance Altera has definitely called 1Q as the bottom of this Semi Cycle. Forward PE is 15.3, a quarterly dividend of $0.08 for an annual return of 0.9%, and cash minus debt is $2.98 or $9.25/share (Data from Capital IQ). Note: Altera was upgraded to Overweight from Equal Weight Thursday 5/31 by Morgan Stanley.
Nvidia makes graphics chips for use in smart phones, personal computers, tablets and professional workstations markets. Nvidia's sequential 2Q revenue guidance is up 10.3%. Primary drivers are the introduction of Kepler Graphics in April and continued growth in Pro Graphics and Tegra mobile processors. For more details see my previous Seeking Alpha article here - "2012 Could Very Well Be Nvidia's Breakout Year." Forward PE is 13.2 and cash minus debt is $3.11B or $5.02/share (Data from Capital IQ).
Cypress Semiconductor (CY)
Cypress makes programmable system-on-chip (PSoC) devices for consumer, industrial, medical, system management applications and touchscreen controllers. Cypress's sequential 2Q revenue guidance is up 10% from 1Q 2012 which was down 23.6% from Q4 2012. Forward PE is 10.3, a quarterly dividend of $0.11 for an annual yield of 3.3%, and cash minus debt is $28.9M or $0.20/share (Data from Capital IQ).
Marvell Technology (MRVL)
Marvell makes mobile and wireless products comprising communications processors plus integrated data storage products. Marvell's sequential 2Q revenue guidance is up 8.7%. Forward PE is 8.6%, a quarterly dividend of $0.06 for annual yield of 1.8%, and cash minus debt is $2.2B or $3.80/share (Data from Capital IQ).
Texas instruments (TXN)
Texas Instruments is the world's largest analog semiconductor. They also have a large presence in mobile and embedded processors. Texas Instruments sequential 2Q revenue guidance is up 7.5%. Forward PE is 11.9, a quarterly dividend of $0.17 for an annual yield of 2.3%, and cash is 2.76B and debt is 5.28B (Data from Capital IQ).
Qualcomm is the world's largest communication chip company covering all segments of the mobile chip industry. Qualcomm's sequential 2Q revenue guidance is down 6% which seems out of place with the majority of semiconductor companies. During the 1Q earnings conference call management cited the fact that they could not get enough 28nm wafers to meet demand from their foundry partner TSMC. Note: Nvidia's Tegra processor is on 40nm. Qualcomm's forward PE is 13.7, a quarterly dividend of $0.25 for an annual dividend of 1.7%, and cash minus debt of 13.9B or $8.12/share (Data from Capital IQ).
Taiwan Semiconductor (TSM)
TSMC is the world's largest semiconductor foundry. They made available the 28nm process node for production in Q4 of 2011. Due to the overwhelming demand from customers such as Nvidia, Qualcomm and Altera their sequential 2Q revenue guidance is up 20%. Forward PE is 11.9, a quarterly dividend of $0.1025 for an annual yield of 3.0%, and cash minus debt is $3.69B or $0.71/share (Data from Capital IQ).
Almost without exception the semiconductor industry has called Q1 as the bottom of this semi cycle and individual semiconductor companies are providing revenue guidance consistent with that view. Although we are heading into the summer months with Europe again front and center one can look to start a position in semiconductors on any dip in the market.
Disclosure: I am long NVDA.