"While we do not expect this to be a high volume SKU, we believe it's meaningful as it indicates HP has tested and validated Atmel's metal mesh technology. We believe this opens the door to a growing partnership and may indicate penetration beyond just tablets and into HP's mainstream PC line. Furthermore, we believe Atmel's Windows 8 certification, announced a few weeks ago, will help the company secure a meaningful percentage of Bay Trail tablets coming to market over the next few months. Additionally, Atmel has secured the touch controller in Sony's PS4 game paddles, a socket that we believe could provide $15 million annually."
"Overall for Atmel, we think the Street underestimates all, or a portion, of the following: (1) new sensor hub opportunities; (2) a strong cyclical recovery in the core MCU business, also benefiting the ASIC and RF units; (3) Win8 touch PC wins; and (4) XSense demand that we believe is growing in late 2013 and, more importantly, in 2014. Additionally, the unwinding of the take-or-pay LFoundry agreement and higher utilizations should drive gross margin expansion of approximately 400 bps over the next six quarters, benefiting the bottom line."
ATML closed at $7.53 yesterday, with a 52-week range of $4.92-8.40.