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Pierr Johnson  

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  • Time To Take A New Look At Hewlett-Packard Shares: A Contrarian Call [View article]
    Thank you for the link and comment. That was Rich Gardner back in 2010--the good old days when Hurd was under-investing in R&D and dining with pretty ex-actresses!

    Ahh, to think of the mess that has come since!

    Yes, the Citi downgrade got me to thinking how out of line the valuation is, even with the fundamentals being what they are. Even with his negative metrics, it is very cheap. He did reiterate the Sell rating more recently. I can track it down if you need it.

    Again, thanks.
    Dec 14, 2012. 11:58 AM | Likes Like |Link to Comment
  • Time To Take A New Look At Hewlett-Packard Shares: A Contrarian Call [View article]
    Thank you for reading this and contributing a comment. Yes, beauty is in the eye of the beholder. I read Suva's sell rating in a report dated 11-20-12, when the stock was about $12/sh and his target $10.50/sh (down 12.5%). It actually prompted me to consider a contrarian call because the valuation was so out of line with the revenue and EBITDA HP will generate even in his negative scenario. Of course the stock is up 20% at present.

    That the company would induce a breakup seems unlikely to me, given the reception of Apotheker's initiatives. That a corporate raider would try seems unlikely because the leverage is so high. Who would commit a lot of equity to such an undertaking? I do feel that an attempt to equitize its Enterprise businesses in some way would be very interesting. But I do believe a period of stasis, after such turmoil, is the most likely course

    Again, thanks for your comment
    Dec 14, 2012. 11:49 AM | Likes Like |Link to Comment
  • Time To Take A New Look At Hewlett-Packard Shares: A Contrarian Call [View article]
    Thank you for your input. Love your comment too.
    To turn this rig around, she'll need the ocean blue!

    The time frame is lengthy and seems open to accommodating ongoing change in the company's markets. So we will see.

    Again, thanks for taking the time to read this
    Dec 14, 2012. 11:20 AM | Likes Like |Link to Comment
  • ARM, Intel, And Customization: Clearing Up Some Key Points [View article]
    Kudos to Ashraf, Dana and the community for sponsoring such an informative exchange of view points on what is a very large and hard to comprehend topic. Indeed, the exchange in many ways exemplifies the complexity.

    Dana wrote the piece to which Ashraf responds upon reading a CNET report on Linley Gwennap’s recent post on the Apple A6. (Dana provides the trail above.) Long the author of The Microprocessor Report, Gwennap is a leading authority on MPU and SOC design. Notably, he reports that the A6 is in fact based on a customized ARM core by a design team that originated with its 2008 acquisition of PA Semi. (Note: processor cores, MPUs and SOCs are all customizable devices; given designs are fixed for specific high- and low-volume applications.)

    Typically, ARM licenses a trademarked Processor Core with defined design parameters. However, Gwennap reports that Apple negotiated the right to develop its own ARM compatible CPUs, one of the few companies able to do so. This no doubt reflected Steve Job’s goal to have Processor that was not only “insanely great,” but optimized to its unique Apple-specific purpose. Gwennap notes that Apple as a result has beaten Samsung to market with Cortex-15-class CPU by a three month period that encompasses the holiday selling season. (Note: the Cortex 15 is a recent licensable ARM core.) It is ironic that Samsung is the foundry that manufactures the A6 for Apple.

    I also want to offer a couple of related points. So much of the dialectic seems driven by the notion that Intel is toast, stranded with yesterday’s moribund offering, selling into yesterday’s moribund platform. And, indeed, the proliferation of Tablets and Smart Phones deprives the PC market of that growth that results from activities better performed by these new devices. That said, computing on PC’s and Servers will continue to generate demand for millions and millions of advanced processors manufactured by in large by Intel.

    More to the point, Intel’s effort to secure sockets in tablets and smart phones betrays a greater nimbleness than most investors understand. First, as the company discussed at length at last week’s IDF, it has adopted an SOC approach in developing processors for these new markets. It has even optimized its process development around alternative CPU and SOC offerings. It appears they have moved their strategy far beyond porting Atom processors down the roadmap until they are more power/performance efficient than ARM. It is clear that not enough of us are keyed into this. In other words, Intel management has been planning around this for some time.
    Sep 21, 2012. 12:14 PM | Likes Like |Link to Comment
  • ARM Holdings Still Eating Intel's Lunch [View article]
    Good points. The neat thing about Tablets is they displayed no traction until Apple launched the iPad as a Smart-Phone processor-based device. The beauty is that it is not a compute device and the resource demands of a Intel Microprocessor are entirely unwarranted. So Intel's absence is not that surprising to me, especially since iPad-type tablets are still relatively a new platform. I agree that Windows 8 offers one route into this market for Intel. But I also feel that Intel's true traction in the Handset and Smart Phone offers another one.

    I did not comment here on valuation and have both in my model portfolio as top tier Technology Plays. As an IP provider, ARM captures a sliver of the end market value of its products, hence its very high valuation metrics and low revenue model. Even as an IP provider, it commands a valuation that is extended to even a greater degree by its remarkable traction. So if ARM falters in any way, a sharp contraction in these metrics will result. Any sign of Intel's success in the Smart Phone market could provide this trigger. Moreover, the likelihood of such success, even to just a modest degree, has never been higher. So, yes, things are fundamentally changing and there is a classic pair trade in play here.

    We have two great companies here with amazing technology poised at the frontier of each others' markets. The slightest tip of Intel towards ARM's core markets will reveal a profound mis-allocation of capital, and a sharp contraction of ARMH stock will result. The economic impact of any Intel success may be trivial, indeed. But ARMH shares could be crushed, as they say.
    Sep 11, 2012. 01:38 PM | Likes Like |Link to Comment
  • ARM Holdings Still Eating Intel's Lunch [View article]
    Dana, thanks for the reply. I agree that strong tablet sales are muting PC demand. But I don't think that is what has produced the revenue miss, given its magnitude. Intel identified channel de-stocking, weak Enterprise PC demand and weakening emerging market demand as factors behind the miss. Tablet demand is as they expected, I'm guessing.
    Sep 11, 2012. 10:18 AM | Likes Like |Link to Comment
  • ARM Holdings Still Eating Intel's Lunch [View article]
    Dana, thank you for inspiring this spirited and interesting exchange.

    A couple other points worth note: Intel identified the factors that produced the large revenue miss; ARM Holdings is not mentioned and the impact of strong iPad sales was likely fully factored into prior guidance.

    I have a comment on the design flexibility of the ARM-IDM-foundry model: this has always been a strong selling point for ARM in the handset market, as has its low power design. That said, Apple with its iPhone has sparked an emphasis on systems and platform integrity that could ultimately require more uniform processing solutions and this could well foster Intel’s entry into the market. It remains to be seen.

    Sufficient power efficiency is the byproduct of Intel’s Technology Roadmap, as it executes one node ahead of the rest of the industry.

    The competitive dynamic between Intel and ARM holdings is as interesting as it is complicated. I have written on it in the past and expect to do so again soon.
    Sep 10, 2012. 04:30 PM | Likes Like |Link to Comment
  • Intel (INTC) might not be alone in investing in ASML - the Dutch chip-equipment maker has also asked major customers TSMC, the world's top contract chip maker, and Samsung (SSNLF.PK) to co-invest. That could well negate any aim of Intel's to use its interest in ASML to maintain a manufacturing lead over Samsung.  [View news story]
    The ASML press release, which differs markedly from the Intel release, makes it very clear that other customers can participate in this "Co-Investment" program and purchase as much as an additional 10% of the company. Note that Intel is consistently well ahead of any other semiconductor manufacturer and its lead will likely remain intact.
    Jul 10, 2012. 11:38 AM | Likes Like |Link to Comment
  • Oracle Swings Away in a Market Forgotten [View article]
    Thank you for the comment. I would say Itanium is what it is and has been for the better part of the decade. High Performance computing has always been a niche market. And as you note, the performance capability and growth has come at the x86 end of the market, where the road-map is indeed much faster. Clustering, Blades, Virtualization, etc. are indeed facilitating a move to utility Cloud computing, both private and public. That said, specific high performance computing applications will continue to have the requirements that Itanium-based and competing systems satisfy. It is (on a unit basis) relatively small. But it offers (and integrates) some of the most advanced technologies achieved, albeit to relatively narrow ends. Economically less significant? Yes. A bit quaint? OK. But these applications are of critical importance to those who require them.
    Mar 25, 2011. 12:51 PM | 1 Like Like |Link to Comment
  • Oracle Swings Away in a Market Forgotten [View article]
    Thank you for adding this data. I didn't have the IDC analysis and data handy, but hope to dig them out soon. Unix system ASPs are much higher, so market share on a Unit basis is lower. It is very instructive to view analyses that provide market share by units and revenue with ASPs. Margins are higher, but so is the engineering and service burden. And service support provision for the systems vendor is valuable add-on business as well.
    Mar 24, 2011. 05:13 PM | 1 Like Like |Link to Comment
  • Western Digital to Acquire Hitachi GST [View article]
    Thank you for the comments and questions. I reported management's view that a market with four surviving participants would be sufficiently competitive. I am very interested to see if this plays out. Regulators have minds of their own, after all. I did not have time for a more thorough market analysis, though I am eager to perform one. The market dynamics vary considerably by form factor, as does the concentration to some degree. I agree, too, that the market power of Dell, HP etc., will likely be a key factor, however the deal proceeds. Regulatory guidelines regarding competition and market concentration ostensibly are systematic (something else I hope to return too), though the process can be politicized as well. Let’s see what happens. I am eager to write more on this topic.
    Mar 14, 2011. 11:44 AM | 1 Like Like |Link to Comment
  • MIPS Technology Challenges ARM's Cell Phone Chip Design Monopoly [View article]
    Hats off to the author and commentators for the interesting discussion. For me the key issue seems to be the degree to which MIPS, with its heritage in robust processing applications, can deployed in systems with the sparest of power requirements. So the GreenDroid merits a close look. In addition, it seems that proliferation of tablets and other devices, which so clearly is benefiting Intel, offers MIPS opportunities as well. Still, we could be in for a bumpy ride, given the stock appreciation over the past six months. That said, from either side of the trade, it is worth a closer look.
    Sep 17, 2010. 12:59 PM | Likes Like |Link to Comment
  • Genzyme's Very Bad Year [View article]
    Kudos for the insights. Still, it is important to point out the Lumizyme approval and related manufacturing issues are separate from the viral infection that halted production of Cerezyme and Fabrazyme at the Allston plant. The company has moved beyond remediation and is well through its first run of production on both therapeutics. It has transferred production of Myozyme to the Belgian plant as is seeking approval there, which should remove pressure for the approval of the related Lumizyme. (An aside: because Myozyme displayed slight variations when manufactured in 2000L bioreactors, the FDA required a new appellation and approval track.)

    The impact on the marketability of competing products to Cerezyme is unclear to me. Anecdotal evidence suggests many patients could adapt to the temporary shortage of both Cerezyme and Fabrazyme. But consensus estimates encompass a return to 20% annual growth. A stock that serially stumbles deserves its detractors. That said, if the company meets its established mileposts (at long last, indeed), the smarter money will be long at this point in time
    Nov 24, 2009. 02:07 PM | Likes Like |Link to Comment
  • IBM and Sun: Simply March Madness? [View article]
    In my view, the logic of this deal has always been suspect. Yes, the value of Sun’s technologies is understated by the market cap that its existing financial structure allows. Unlocking this value through some sort of dis-amalgamation of Sun’s legacy and forward-looking businesses should be Mr. Schwarz and Co.’s primary goal. But IBM could hardly be the key to this value creation, because it directly competes against Sun in most of this latter company’s core businesses. Would IBM support Solaris against its own AIX? Though most of us hardly think about Unix computing these days, it is critical to most of Sun’s customers. And why acquire Sun if you don’t need (and shouldn’t acquire) Sun’s Unix-server and StorgeTek businesses? Indeed, if IBM’s goal is to acquire and retire these legacy businesses, anti-trust enforcement will indeed preclude its completion.

    My advice to Sun management: It is time to slice and dice. In a normalized economy, technologies and businesses must not be supported with the expense structures of bygone eras. With regard to your products, show us (as Michael Capellas once said) what’s under the Kimono. Once these businesses are more profitably and clearly reflected in financial results, higher valuations will follow. Once non-core middling’s are gone (or at least disaggregated), investors will accord shares the appropriate valuation.

    Apr 7, 2009. 10:48 AM | Likes Like |Link to Comment
  • Vishay, International Rectifier Cat Fight Continues [View article]
    I agree that both companies should be left to stick to their knitting. I have covered both Vishay and International Rectifier for over a decade and knew previous managements of both companies pretty well. And I eagerly awaited IRF's restated results in plotting the purchase of its depressed stock. No sooner were they here than Vishay pounced with a paltry premium.

    Surely IRF was brought to its knees striving to seek the highest value in its franchise through serious accounting and business malfeasance. That said, the reporting mechanisms are back in place and a new management presides over a higher value Power IC and Discrete franchise that is intact. Even in its weakened state, this business model is inherently more profitable than that Vishay has so capably pursued over the years. It requires higher levels of investment and different channels that target different sorts of customers.

    It is not clear to me why Vishay is expending such effort to pursue what seems clearly to be an ill-conceived business combination. Granted, IRF shares are severely depressed, and the accounting scandal has strained its business. Yet a cheap price alone hardly justifies this intervention in IRF's turn-around. And given its size and difficulty, it could very well gum up Vishay's execution as well. For now, I am on the side lines (and unable to vote).
    Oct 9, 2008. 12:38 PM | Likes Like |Link to Comment
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