The following is excerpted from a recent note to clients:

Data Domain (DDUP) reports tonight. Street expectations are set at $68M/$0.07. Our checks continued to show strong uptake of deduplication products with DDUP on the winning end of some large deals. As such, we would be surprised if Data Domain missed September quarter forecasts.

The following is excerpted from a recent note to clients:

Seagate (STX) reported sales of $3.03B and EPS of $0.26 (see conference call transcript). Revenues came in below our previous expectations on lower shipments as strength in notebook units was more than offset by deterioration in 3.5” demand. Aggressive cuts in opex as well as lower taxes allowed the company to surpass our previous earnings estimates even with lower gross margins. As we previewed, a combination of deteriorating demand and falling pricing is expected to lead to a revenue decline in December.

SanDisk (SNDK) reported revenue of 822MM (+1% Q/Q), above consensus expectations but non-GAAP per share loss of $(0.59) was worse. The wider losses were due to non-GAAP product GM of -17.5%, well below consensus and even worse than our Street low estimate of negative 3.5%. Weak GM was primarily due to severe price competition as SNDK had to match price cuts instituted by competitors' in order to move its products, particularly within the retail channel. 

Management is guiding to Q4 total rev in a wider than normal range of $725-875MM (mid-point down 3% Q/Q). We believe that results in Q4 will continue to be dominated by heavy emphasis on price promotion, particularly as we approach the holiday selling period, as card vendors (including SNDK) try their best to stimulate consumer demand to drive product sales and clear inventories. We are making adjustments to our estimates to reflect this view. For Q4, we are modifying our street low estimates to $765MM (-7% Q/Q)/loss of $(0.60). For CY:08 and CY:09, our estimates are at $3.25B (-17% Y/Y)/loss of $(1.07) and $3.07B (-6% Y/Y)/loss of $(0.81), respectively with the changes primarily coming from lowered GM assumptions (we are conservatively modeling product GM to average 4% in CY:09), partially offset by tighter opex controls.

EMC Corp. (EMC) is expected to report Wednesday pre-market open. Street estimates are set at $3.73B/$0.195 for Q3, with consensus expecting Q4 guidance for $4.15B/$0.25. 

In general our view has not changed from our report of September 23rd, where we downgraded the stock. We continue expect EMC will likely report in-line or just below Street forecasts. Our view remains that strength around the recent CX upgrade cycle should offset a portion of the unexpected weakness in September. However, disappointing revenue results from both [[IBM]] and Sun (JAVA) suggest potentially there is more risk to the downside than we had anticipated 3 weeks ago.

F5 Networks (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).

Acme Packet (APKT) Update

With regard to the on-going discussion between stand-alone SBCs and/or integrated SBC with (router or Media Gateway). We have been able confirm through field intelligence that service providers testing Sonus Networks (SONS) integrated solution, have experienced a 30% drop in performance of the Media Gateway. This means the Service Provider would need to add more capacity on their network for an integrated SBC solution and purchase additional equipment. This obviously would be good news for vendors with integrated SBCs as the carrier would need to purchase more equipment.

Yesterday morning’s release of retail data points to a number of items that we believe to be relevant to the consumer electronics space, and  Dolby (DLB), in particular. Retail sales, in general, for September were down 1.2% from August and 1.4% below last year (estimates were at a decrease of .07%.) More specifically, September ‘Electronics & Appliance Stores’ sales were down a steep 10.8% (m/m) after being up modestly (2.4%) in August.

For comparative purposes, last year’s September decline was 2.0%. While data for ‘Computer and Software Stores’ or ‘Appliance, TV & Camera Stores’ has not been released for September, the previous month’s gain (+0.9% and +2.8% respectively) in this category was less than in E & A stores; we conclude that it will be down an amount similar to the E & A drop in both categories.

Memory chip pricing has shown no sign of stabilization for either DRAM or NAND flash drives over the last six months, and expectations for the next six months aren't more encouraging as we head into the seasonally weaker time of year (but we know all this already). Actually, this week we could see spot pricing and activity pick up a bit as buyers return from the Consumer Electronics Show, though any rebound will be short-lived. That said, we think investors should start to look at SanDisk Corp. (SNDK) on the long side.

No, pricing will not get unexpectedly better and more capacity is still slated to come online. However, NAND demand is on the verge of another exponential expansion and SanDisk is just too cheap at these levels to ignore. Less importantly, we are also seeing some reductions in DRAM build plans by Taiwanese firms pushing out tool orders as they are about to experience EPS losses greater than Q1 revenues.

Listening to CNBC and looking at your screens, one might surmise that the world is coming to an end. Specifically, for you Intel Corp. (Nasdaq: INTC) owners out there, it appears as if PC demand in the back half of December has collapsed, inventories are burgeoning, the economy is falling into recession, and no one will ever buy another PC again. From our perspective this couldn't be further from the truth! We see strong sell-through of processors through distribution; we see little to no price concessions in Q4 of last year, and we enter Q1 with relatively low inventories for both Advanced Micro Devices Inc. (NYSE: AMD) and INTC. More importantly, we can say the same not only for processors but also for disk drives and flat panels as well.

By way of background for those of you not familiar with my firm, Avian Securities, Avian is an independent brokerage research boutique serving institutional investors, which earns a living monitoring pricing and inventory levels of technology components in an effort to analyze the direction of technology stocks. Our primary area of expertise is in and around the PC sector including disk drives, flat panels, memory chips, and processors. Allow me to share with you some of our thoughts and our data.