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Robert McDonald
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FROM INSIDE SILICON VALLEY: Sorting the truth or likely truth from the noise is a key attribute of the successful investor. My commentary is a distillation of some of this effort relative to particular stocks and investment areas. My publishing at this point in time is limited to the blogsphere,... More
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    Amazon stock pricing is a house of cards. A huge selloff can occur at any time catalyzed by a management misstep (witness Netflix last year), a significant miss on an earnings report or a more aggressive effort by Google in its entry into the shopping business. Find what you want with the Google Search and press the buy button now. No bricks, no mortar, no warehouse, no warehouse employees, no robots and with fast shipping direct from manufacturer to customer:

    Also remember that Amazon is now being forced to collect sales tax in many states, for example California. The 8% sales tax in California has significantly lowered their competitive advantage vs. stores like Target, Bed, Bath and Beyond, Costco, Fry's and Best Buy.

    Amazon pays no dividends and given its current PE, I don't think it can go much further as a growth stock. Why would anyone want to take the risk of owning it when the rewards are so limited, especially at this stock price. It the stock price continues to go up it only adds to the downside risk. Sounds like blind faith to me.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 02 11:29 AM | Link | Comment!

    If Intel is going to be successful in mobile they will be a viable competitor for Apple's chip business. They now have a golden opportunity.

    Apple is in the process of pulling all of its current ARM based A series microprocessor manufacturing out of Samsung for competitive and copying reasons. The credible rumors, rumors that provide specific detail including trial runs, the process technology to be used and a possible US Fab, say Apple is well on its way to moving to the TSMC foundry using their 20 nm process technology.

    I would not be buying Intel until this situation is clarified. If they cannot get Apple's business now or in the near future, then there is something wrong with Intel's viability in the mobile business,. They can do this in two ways and ideally both.

    I would ask why are they not being discussed as an alternative foundry to TSMC, the foundry that is rumored to be the beneficiary of Apple's movement out of Samsung?

    And why are they not being discussed as a downstream provider of a next generation high performance processor that Apple would migrate to in future products. Apple would then be leaving it ARM based A series processors it designs behind putting Intel into the cat birds sear. Intel'sTrigate 22 and 15 nm process technology is at least one generation ahead of competitors, it consumes 50% less power and now can potentially include an LTE radio on board the chip. This provides a true system on a chip solution (SOC) that could potentially eliminate the need for a separate QCOM broadband processor with radio capability.

    If Intel does not get this business in one form or the other it is a strong warning that Intel has cost, commitment or flexibility issues which they can little afford at this point in time.

    Disclosure: I am long AAPL, QCOM.

    Jan 27 11:50 AM | Link | Comment!

    No doubt Apple is trying to transfer all A series processor manufacturing out of Samsung and TSMC is the big beneficiary. And of course TSMC is the prime chip supplier for QCOM which is in the catbirds seat selling into all mobile platforms. I believe TSMC also supplies ARM based processors for a number of others including BRCM and NVDIA

    Downstream Intel may be the wild card. You have to believe Apple and Intel are talking regularly. Intel process technology is 2 generations ahead of TSMC. Intel's latest 22nm technology offers very high performance with what may be the lowest power consumption of any competitor. And they will have new 14 nm technology on line in 2013.

    There are several issues in the way. Intel wants to promote its own mobile processors of which the Atom was the first example, more variations on the way. These devices will also be shipped to Apple's competitors which has the benefit of spreading process development and state of art fab costs across multiple customers.

    But this might take away some of Apple cutting edge or even leave it behind. If other competitors ended up with a strategic advantage as a result of using Intel products, Apple will have to watch out big time here. Another of the many reason Apple and Intel must be in regular discussion and even in joint pilot projects.

    Cost is another factor. Intel has by far the most expensive process technology and has very high margins on its X86 devices, at least up until now. They may try to keep pricing and margins high on any processors that it sells into mobile. That could be strategic blunder on their part unless they can also offer advantages that make up for pricing differences.

    On the other hand, Intel's advanced technology allows it to put many more transistors into smaller and smaller areas, giving it the ability to deliver more functionality at a potentially lower cost due to reduced chip size (more chips/wafer).

    Intel has the disadvantage right now in radio devices vs QCOM and others. The do not offer LTE (aka 4G) technology as of yet. You have to believe they will soon have this for use in their system on a chip (SOC) solutions.

    There is also the possibility of Intel becoming a foundry for Apple's ARM based mobile A series processors based on ARM designs. And Intel already supplies all the processors in Apple's Mac line. Although there have been strong rumors that Apple is experimenting with what could be its own lower cost ARM based designs.

    So as you can see Apple and Intel have a lot to talk about and TSMC may loose some of that it has recently gained. Whether these talks go anywhere beyond where they are remains to be seen. If there is an expanded partnership going forward, this could bring yet another major manufacturing operation home to the US.

    In the case of TSMC will have additional major new opportunities if ARM based processors start to be competitive for servers. This will occur at Intel's expense.

    Disclosure: I am long AAPL, QCOM.

    Jan 19 7:18 PM | Link | Comment!
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