COMPETITORS: STABILIZING.

INTC reported Q2 revs of $8.024B, +10.2% above Street expectations of $7.284B. The Q2 Q/Q rev growth of +12.3% is the highest in over 20 years (since 1988). GM of 51% was above management guidance of mid-40s. Inventories of $2.805B declined -7.9% Q/Q. Management guided Q3 revs of $8.5B +/- $400M, +8.8% above Street expectations of $7.813B.

We expected INTC to beat and guide higher, having published on the name 38 times since we went long INTC and several other PC supply chain names in April (see SMSC: Positive PC Supply Chain Indicator, 4.9.09). Recently, we have seen numerous positive PC supply chain data, especially from Taiwan (see Taking Stock: Initial June Taiwan Data Very Positive, Well Above Seasonal Norms, 7.9.09).

Last week (7.2.09), XLNX lowered its guidance to -5.5% below Street expectations. A press release stated that the shortfall was due to "supply constraints on certain Virtex-5 devices that are in high demand." We noted that the high demand was consistent with recent data, esp surrounding China 3G infrastructure, and also noted that the Virtex-5 was manufactured at the 65nm node, which only accounted for 11% of UMC's revs. We reasoned that 65nm was a mature process, and thus yield issues were unlikely. This morning, a DigiTimes article, citing UMC's CFO Chi Tung Liu, confirms this.

Thus we reiterate our positive stance on several names:

EVENT: ALTR, XLNX MODESTLY RAISE ESTS. Monday after the close, ALTR updated its Q1 (Mar) guidance, now expecting revenues down 15-20% Q/Q vs 15-25% previously. The midpoint ($259.5M) is +2.2% above Street expectations of $253.8M. Tuesday morning, major competitor XLNX announced that it sees FQ4 (Mar) revenues down 13-18% Q/Q vs 15-25% previously. The midpoint ($387.4M) is +5.9% above Street expectations of $365.7M.

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CAUSE: “Great Deal Of Uncertainty,” Especially In PC, Consumer Electronics Markets

EVENT: AAPL BEATS, GUIDES LOWER

On Wednesday, Apple (AAPL) reported record FQ1 revenues of $10.167B (+4.4% above Street estimate $9.742B). The Q/Q revenue growth of +28.8%, slightly below a wide 7-yr average of +31.5% (ó=26.16). Management guided FQ2 (March) revenues $7.6-8.0B ($7.8B midpoint -4.9% below Street $8.203B; implied Q/Q revenue decline -23.3% well below the 7-yr average of -4.1%, ó=42.11, but in line with last 3 years).

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EVENT: STREET SEES 09 Y/Y SEMI REVS -14.9%. In mid-December, we used Connexiti to screen for Y/Y revenue growth for US traded semiconductor companies with a market cap >$100M, which produced 64 names (see Taking Stock: Semis Digging A Deeper Hole: Street 2009 View Overstated,
12.16.08). At that time, the Street was modeling 2009 Y/Y revs -12.5% for the group, while we suggested that a best-case scenario was down -20% Y/Y. Since then, the environment has worsened, and while Street Estimates have become modestly more negative (moving from -12.5% to -14.9%), our own
best-case scenario has been lowered from -20.0% Y/Y to -23.0%.

EVENT: Standard Microsystems Corporation (SMSC) reports FQ3 revenues in line, but FQ4 guidance sharply lower (-37.2% below street) (see conference call transcript).

Actel (ACTL) bottomed on Nov. 20 at $6.92 and now trades around $12, an increase of 70%+.

On Thursday, Seagate Technology (STX) reported FQ2 revs of 3.420B (-2.1% below Street expectations of $3.493B, and below the $3.45B midpoint of management’s guidance range of $3.4-3.5B). The +4.1% Q/Q increase is below the 5-year average of +8.5% (?=6.01).