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Pierr Johnson  

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  • Structural Change In The Mobile Processor Marketplace: Intel Wins; ARM, AMD Lose [View article]
    Great contribution! Your expertise and history with Intel allow you to marshal quite a compelling argument. I would like to think those with counterarguments could see the refutation you provide. However, there is a mania involved that may make this difficult. I have followed Intel for about twenty years and have understood these arguments for a very long time. We are finally at the inflection point in the road map where the laws of physics will give Intel the Mobile market share it has sought for so long. But you have stated it better than I can. Again thanks. I look forward to you future posts.
    May 20, 2013. 12:24 PM | 6 Likes Like |Link to Comment
  • Lilliput Slays Gulliver: ARM Vs Intel, And Why Intel Lost The War [View article]
    I would like to invert your argument. Apple, Qualcomm, and Samsung have been major Tech players for one to two decades and each attained its leadership with its own technology(ies). Likewise Google, with Android. The beauty of ARM's IP allowed it to participate, via IDMs and foundries, but hardly made it the singular enabler. Think of the economic value of ARM's contribution in terms of the very low royalty rate it earns, especially relative to what Qualcomm captures with its royalties, which are still a small percentage. I've been a huge fan of ARM and have followed it for over a decade. But it is what it is.

    It is Intel's view that its processor designs will achieve parity with ARM in terms of power efficiency in the next iteration or two. In most other respects, ARM is far behind (e.g., 64-bit). Of course, Intel's process advantages are likely permanent. It will always get there a year or two ahead of TSMC and Samsung. The superior position in both design and process, once attained, will be very difficult to reverse. If achieved, this will be a permanent, fundamental change in technology and market position.

    Regarding new market penetration by Intel or the ARM ecosystem: years of observation indicate to me that the power of incumbency is very high and Intel is notably persistent. ARM provides processor cores and technologies and can only be as persistent or successful as its customers and their manufacturers and customers. It will be very interesting to see this to unfold
    Mar 26, 2013. 06:22 PM | 1 Like Like |Link to Comment
  • Lilliput Slays Gulliver: ARM Vs Intel, And Why Intel Lost The War [View article]
    Thanks for the thoughtful article, and for promoting such a vigorous exchange in our community. You provide a good summary of the “ARM Ascendant” thesis. I do think you have neglected to reference or refute key counter-arguments, however. Intel’s technology lead remains and will deliver superior power efficiency with existing and new designs as we move down the roadmap. Samsung dedicates its leading process technologies to NAND and DRAM, and both Samsung and TSM, their achievements notwithstanding, generally lag Intel by a node at any given time. Intel has indicated this will not allow this to change. Moreover, process and design issues at the leading edge have been a recurring problem for TSM, specifically with ARM-based devices. Of course, we know about them because of the resulting finger pointing and can be confident Intel and Samsung experience them as well, with little public notice.

    Another thing that occurs to me, as huge a fan of Gulliver’s Travels as I am, is that the challenge to Intel in the App Processor market is from not the Lilliputian of Arm’s ecosystem, but other Tech giants, specifically Apple/Samsung and Qualcomm/TSMC. And as Ashraf notes, both Apple and Qualcomm use custom implementations of ARM technology. This market has become so unattractive, that TI has pulled its OMAP offering. We might wonder why Intel seeks a spot at all. But it is important to note that the design and process approaches Intel now uses with its SOCs differ from those dedicated to volume PCs.

    So many here are comparing ARM and Intel to Intel and IBM in computing, but the analogy is just faulty. When IBM chose Intel to displace Motorola in its earliest PCs, it elevated Intel to achieve the dominating position it now has. And IBM was the leading PC manufacturer at the time, intent as it was in fostering the transition from business typewriters (where it led) to Word Processing. Compaq, AST and latterly HP joined the fray, but it was the entrance of Dell that first challenged IBM in this market, as its initial growth phase lost some momentum. It was only with the sale of this business to Lenovo that IBM ceded its leading position in this market. Note, too, that though IBM was part of the PowerPC consortium, it remained committed to the Intel/Microsoft platform for its PC offering.

    All of this aside, I really appreciate your article. Two great companies dominating markets that now collide; at the margin is no longer marginal. And I will definitely follow up on some of your references
    Mar 26, 2013. 03:03 PM | Likes Like |Link to Comment
  • Dell A Done Deal? Maybe: Emerging Contours Of The Buyout Suggest Investors Vote No [View article]
    Thank you for your comments. I am eager to tear into the 8-K and may have some additional financial details soon.

    Breakup fees are fairly common and effectively increase the mount of capital a competing bidder needs to finance to win the deal. To the degree the buyout group has borne costs in negotiating the deal, some fees are justified. But the main intent is to increase the threshold for competing bids. (Not a pretty business!)
    Feb 12, 2013. 02:45 PM | Likes Like |Link to Comment
  • Dell A Done Deal? Maybe: Emerging Contours Of The Buyout Suggest Investors Vote No [View article]
    Yes, to the founder go the perks! It is a good thing you bought when you did. Besides Michael Dell, only those who caught the bottom will do well with this transaction. Congrats!
    Feb 12, 2013. 02:35 PM | Likes Like |Link to Comment
  • Some Thoughts On The Dell Buyout, Microsoft's Involvement And The PC Market [View article]
    Thank you for the insightful response! It strikes me that, with the departure of Dave Johnson (head of their Strategy effort), the move to go private is an end in itself and not part of a large, fully considered strategy to address the company’s deficiencies. And, assuming they can even assemble the capital to close the deal, hugely excessive debt will indeed hinder the company’s ability to develop and execute a strategy. Even the loosest covenants will lay claim to cash flows for a significant interval. And, yes, Private Equity investors often require up front returns of one sort or another. So I appreciate your points a great deal

    I believe Microsoft’s involvement is defensive in many ways, just as in many respects the Surface offering is. The simple fact of the matter is that both HP and Dell wavered initially in confronting the challenges Tablets impose on PCs, especially consumer PCs. HP is back on board, to judge from its Analyst Day presentation. Dell may well be running from its problems when focus is most required. Yes, they are doing something with Tablets. But is not that the proper focus, rather than some massive buyout? Again, thanks for your comments
    Feb 1, 2013. 12:13 PM | 1 Like Like |Link to Comment
  • Some Thoughts On The Dell Buyout, Microsoft's Involvement And The PC Market [View article]
    Thank you for your comments. Yes, with Lenovo and other aggressive players in the market, it is tough indeed. I agree that Microsoft would likely want to avoid the PC hardware business model. And it would certainly muck up their channel with conflict. Still, I do see the potential this year for some interesting changes in PCs with the various hybrids and tablets that are coming in the market. It wasn't clear to me that the present PC makers were up to the task. I am pretty sure this is what prompted MSFT to develop the Surface RT and Pro. Still, there seem to be some fairly interesting products in the pipeline that may or may not find success.
    Jan 31, 2013. 03:45 PM | Likes Like |Link to Comment
  • Some Thoughts On The Dell Buyout, Microsoft's Involvement And The PC Market [View article]
    Thank you for bringing this up. This is a thread I have been meaning to trace for a while and the link is a great place to start. While PCs no longer seem to possess differentiation, with the emergence of Tablets, Ultrabooks and hybrids, there is actually room (for a change) for some interesting innovation this year. Of course, this USB-based device is especially interesting! Again thanks
    Jan 31, 2013. 03:32 PM | Likes Like |Link to Comment
  • Some Thoughts On The Dell Buyout, Microsoft's Involvement And The PC Market [View article]
    Thank you for your comment, to which others agree. I agree that MSFT feels the need to direct development of the PC, especially in this dynamic market. Still, I do not believe they would want to own the manufacturing assets, given the weak margins associated with the model. It would complicate things with other customers as well. Also, it is so easy to outsource manufacturing. Still, you have a point. Actually, there is one well known commentator who feels that if MSFT unified the Platform with really elegant devices, it could truly compete against Apple.
    Jan 31, 2013. 03:27 PM | Likes Like |Link to Comment
  • Some Thoughts On The Dell Buyout, Microsoft's Involvement And The PC Market [View article]
    Thank you for your comment. Consumer PCs have been a issue for some years, in my view. Their Corporate offering seems to be a core asset. And like HP they derive buying power with Intel and others across the Server and PC offering. So it may be hard to disaggregate a business to sell, in many ways. (HP's dilemma as well.)

    I agree that the Surface is a new thrust for MSFT. Still, I am not sure they would want the business model that comes with ownership of these assets. It is so easy to outsource this to Asian entities that find the paltry returns (and massive scale) attractive. Still, as you suggest, all cards have to be on the table, don't they?

    Thanks again
    Jan 31, 2013. 03:21 PM | Likes Like |Link to Comment
  • Is Microsoft Getting Desperate? [View article]
    Thanks for the thought provoking commentary, Dana. Apologies, fellow readers, for not slugging my way through all of the comments. A couple points, as others may well have noticed: I do not believe Microsoft intends Windows 8 to the full release Windows 7 is. In fact, I would argue that Enterprise users are still actively migrating to Windows 7; any Windows 8 adoption will likely be around Windows Pro Tablets and both operating systems will likely interact for years to come. On the consumer side, I believe Microsoft is trying to offset the weakness its leading partners Dell and HP have displayed in this key, easily commoditized market. This surely is the logic behind the Surface RT release, which is a highly differentiated product with appealing engineering, however well (or poorly) it does.

    On final comment: While journalists seem to fear we will all be baffled by the touch interface, the fact is that it is very easy to navigate and navigate away from. You do need a touch activated display however!
    Jan 8, 2013. 04:51 PM | 2 Likes Like |Link to Comment
  • GT Advanced Technologies: Why We Like It Despite Management Capitulation [View article]
    Thank you for your cogent recommendation. I am working up an analysis of GT and share many of your viewpoints. The stock was very cheap before they reduced the guidance so dramatically. It remains with an apparent attractive value, with the stock down sharply and guidance dramatically reduced.

    Management has capitulated, indeed, guiding to a 25% decrease in revenues next year and a 31% to 44% decrease in cash and equivalents. GT has strong leadership in key technologies in each of its business units, with solid new revenue-generating products lined up in each once the markets recover. Management executes well and to date has kept ahead of its massively volatile revenue streams. The issue is that management is now suggesting these recoveries may not generate revenue growth until 2014. So, roughly a year from now, things could be very tenuous in this scenario (suggested by their guidance).

    I am not done with my analysis, but sense this will be a strong Buy at some point. Right now, though, it still feels a little early. Downside may seem limited, but uncertainty remains high. I agree that a Buy now will be in the money at some point. The ride may be a bit bumpy, however.
    Dec 20, 2012. 01:07 PM | Likes Like |Link to Comment
  • The End Game For Moore's Second Law [View article]
    Thank you for prompting such a thoughtful exchange. Courtland's main argument is that the research and capital burdens of getting to 28 nm have reduced the number of semiconductor companies that manufacture at the leading edge from 23 to just four. And of the four, two are foundries that manufacture the designs of other companies and two are IDMs that manufacture their own designs.

    There is a lot she has left out to focus us on this basic issue. The adoption of 450 mm wafers and DUV lithography present additional challenges, but three of the four have allied with ASML to move forward in some sort of Intel-led tandem. No doubt, Applied and Lam will progress down the road map as well. And as a major manufacturers of NAND and DRAM memory, Toshiba and Micron have to be planning for a seat at the table as well. And then their are the numerous fabless companies that sell advanced logic at the "Intel-minus-one" and "-two" nodes, such as AMD, nVidia, Apple, Qualcomm, Altera and Xilinx.

    I think Otellini is correct in suggesting the industry will experience significant change. And he is no doubt correct is stating that Intel, while engaging in foundry activity, will not manufacture devices for its competitors (i.e., AMD, nVidia, and likely Qualcomm as well). So while it is bound to get ugly for some, there will likely be spots for Samsung and TSMC, as well as Intel. Even as the capital burden rises, the economics for high volume advanced memory (DRAM and NAND) and logic (Processors, FPGAs and select ASICs) will continue to work, at least for a node or two more.
    Dec 17, 2012. 01:32 PM | 1 Like Like |Link to Comment
  • The End Game For Moore's Second Law [View article]
    Actually, IBM operates a sizable Semiconductor business and conducts research on leading edge technologies, as last week's exciting news suggests. They manufacture much of their non-Intel processors which are used across their server product line. Since Apple abandoned the PowerPC, the business has operated "under the radar". Back when Global Foundries was on AMD's books, their were process technology agreements that survive to this day, as others have noted in this exchange
    Dec 17, 2012. 01:00 PM | 1 Like Like |Link to Comment
  • The Bull Case For Hewlett-Packard [View article]
    Thank you for your paired recommendations on HP shares.

    Some observers itch for Whitman's departure, though continued management turmoil is hardly a good thing at this juncture. She has articulated a detailed turnaround plan and shared it with investors. I am guessing she will be given the chance to implement that plan.

    The goodwill from most recent acquisitions has been written down in a series of non-cash events that nevertheless reduce book value and the metrics that are embedded in its debt covenants. There is something of a clean slate, though.

    The stock is a nice dividend payer and on the fiscal 2013 EPS target (which corresponds to the following year consensus), the stock has a PE of 4.1. This is incredibly cheap. The stock is up 20% or so from its recent trough. As I argue elsewhere, I believe the shares will continue to find value buyers, limiting downside and enhancing upside near term. Key things for me to track in the year ahead are HP's traction with Commercial Tablets, hybrids and hyperscale computing platforms.
    Dec 14, 2012. 01:30 PM | 1 Like Like |Link to Comment