Investors May Be Under-Valuing This Semi IC Stock By 45%
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Value Thoughts On International Rectifier CorporationScott Wachsler • May. 24, 2012
Value Thoughts: International Rectifier CorporationScott Wachsler • Sep. 26, 2011
Wed, Aug. 20, 12:46 PM
Wed, Aug. 20, 12:18 PM
- Infineon (OTCPK:IFNNF) is paying $40/share, or $3B, in cash to acquire International Rectifier (NYSE:IRF). The price represents a 51% premium to Tuesday's close, and is well above the ~$2B reported by Bloomberg.
- Infineon is paying ~$2.4B net of cash for the analog chipmaker. The deal will be financed with a mixture of existing cash and credit facilities, and is expected to close in late 2014 or early 2015.
- The companies declare IRF's gallium nitride (GaN) power management discrete components and ICs complement Infineon's own GaN offerings, and (echoing arguments made for recent chip deals) that the combined company will benefit from greater R&D scale and manufacturing/operational synergies.
- IRF is now up 47.4% to $39.16. The company has posted its FQ4 report in tandem with the Infineon announcement.
Wed, Aug. 20, 12:12 PM| Comment!
Wed, Aug. 20, 11:43 AM
Wed, Aug. 20, 10:15 AM
- Bloomberg reports Infineon (OTCPK:IFNNF) "nearing an agreement to acquire a U.S.- based semiconductor company for about $2 billion," and that a deal could be announced as soon as today.
- No word on whom Infineon is looking to buy. Bloomberg notes it reported last month analog/mixed-signal chipmakers Fairchild (FCS +5.6%), Power Integrations (POWI +11.3%), and Semtech (SMTC +8%) are considered M&A targets, as the chip industry continues to consolidate.
- Shares of all three companies are up sharply, as are those of peers International Rectifier (IRF +5.8%) and Intersil (ISIL +4.4%). FCS and IRF are currently worth $2B; POWI is worth $1.9B; ISIL is worth $1.8B; and SMTC is worth $1.7B.
- "[Infineon] would like to build a stronger presence in power management," says Liberum Capital's Janardan Menon. He adds the market has "high barriers to entry and strong growth prospects," a fact that also hasn't been lost on Texas Instruments and other industry players.
Tue, Aug. 19, 5:35 PM
Wed, Jul. 23, 12:25 PM
- Among the year's best tech performers, chip stocks are selling off (SOXX -1.8%) on an up day for the Nasdaq following weak numbers from FPGA giant Xilinx (XLNX -14.5%).
- Xilinx missed FQ1 revenue estimates by over $18M, and also guided for FQ2 revenue to be well below consensus. The company blamed the FQ1 shortfall on soft defense and wireless sales. BMO and BofA/Merrill have downgraded Xilinx; the former thinks Xilinx's 28nm share might be peaking.
- Xilinx stated on its CC (transcript) the wireless weakness was mostly due to soft 28nm chip sales to Chinese 4G base station vendors; Chinese 4G rollouts have long been viewed as a catalyst for both Xilinx and Altera (ALTR -4.7%). Aerospace/defense sales were hurt by program timing issues.
- Meanwhile, switch/router vendor Juniper offered light Q3 guidance to go with a Q2 beat. The company noted on its CC (transcript) "market dynamics" for U.S. carriers, including M&A activity, are affecting project rollouts.
- Also: Analog/mixed-signal IC vendor Linear (LLTC -4.1%) is selling off in spite of beating FQ4 estimates and guiding in-line (8%-11% Y/Y FQ1 rev. growth vs. 9.1% consensus).
- Notable decliners: FSL -5.3%. IDTI -6.4%. EZCH -3.3%. PMCS -4.3%. LSCC -6.8%. CAVM -4.7%. SMTC -4.1%. ATML -3.2%. TQNT -3.1%. RFMD -2.9%. IRF -2.9%.
- Qualcomm, NXP, TriQuint, and Cirrus Logic report after the bell.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Tue, Jun. 17, 6:58 PM
- The consolidation wave that has hit the semi industry could soon yield tax inversion deals for foreign firms similar to deals seen in the healthcare industry, says FBR's Christopher Rolland.
- Inversion deals allow U.S. companies buying foreign firms to see lower tax rates if less than 80% of the equity in the new company is owned by legacy U.S. shareholders, and the post-merger company has substantial foreign ops.
- Rolland thinks ARM (ARMH), NXP (NXPI), Mellanox (MLNX), and Taiwan's MediaTek could be among the foreign companies targeted by U.S. chipmakers. Worth noting: Mellanox sells more than just chips, and ARM's business model depends on the company maintaining a neutral status within the industry.
- Meanwhile, Nomura's Romit Shah names 15 potential M&A candidates, and divides them into 3 groups: "Sub-scale companies" with high margins and strong IP; "strategic companies" with compelling product lines; and "undervalued companies."
- Shah's "sub-scale companies:" IDTI, ISIL, MTSI, MCRL, SMTC, SLAB.
- "Strategic companies:" ALTR, AMCC, ATML, CAVM, MPWR, BRCM ($22.5B market cap could make it tough to digest).
- "Undervalued companies:" DIOD, IRF, MSCC.
Mon, Jun. 9, 10:36 AM
- A slew of chip stocks are rallying following Analog Devices' (ADI +5.9%) $2B deal to acquire RFIC vendor Hittite Microwave.
- The purchase is part of an M&A wave that has hit the semiconductor industry over the last 12 months, as chipmakers try to gain scale, cut opex, and grow their cross-selling opportunities by consolidating. Other deals: RF Micro/TriQuint, Avago/LSI, Microchip/ISSC.
- ADI, which shares many telecom equipment, defense/aerospace, and automotive clients with Hittite, predicts Hittite's RF, microwave, and millimeter wave ICs will complement its RF and signal-conversion (ADC/DAC) products.
- Several RF and analog/mixed signal chipmakers are higher, but they're not the only gainers: RFMD +1.8%. TQNT +1.8%. PSMI +2.5%. LLTC +1.6%. MSCC +2.1%. IDTI +3.8%. ATML +3.4%. IRF +1.4%. SIGM +3.9%. AMCC +3.8%.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Wed, Apr. 30, 4:38 PM| Comment!
Tue, Apr. 29, 5:35 PM
- AEL, ANAD, ARAY, ARII, ASH, ATML, ATW, AXTI, BCOV, BDN, BGC, BMR, BYD, CACI, CAVM, CBG, CBT, CGNX, CHMT, CJES, CMO, CNW, COHR, CRL, CSII, CW, CWT, DOX, DRE, DRIV, EDMC, EGN, ELGX, ELX, EPAM, EQIX, EQR, EXL, FBHS, FLEX, FLTX, FNF, FORM, GDOT, GLUU, HOLX, HOS, HR, INT, IO, IPI, IRF, IRG, ISIL, JDSU, JKHY, KEG, KEX, KONA, KS, KTOS, LNC, LOCK, LOPE, MAA, MANT, MASI, MDAS, MDU, MET, MTGE, MUR, NBIX, NEWP, NGD, OILT, OPLK, PACB, PDM, PEIX, PFPT, POL, PPC, PRAA, QUIK, RKUS, ROVI, RRTS, SAM, SFLY, SGI, SPRT, SSS, STMP, TEX, TSO, TSRO, TTEK, TTMI, UNTD, VNTV, WBMD, WDC, WLL, WMB, WMGI, WPZ, WTW, YELP.
Fri, Jan. 31, 9:50 AM
- Citrix (CTXS +2.5%) has been upgraded to Overweight by JPMorgan, and to Buy by Nomura. The votes of confidence come a day after shares tumbled in response to the company's soft guidance and disclosure that CEO Mark B. Templeton will be retiring within a year. Several firms had downgraded Citrix in response to the news.
- Tibco (TIBX -1.6%) has been cut to Underweight by Barclays.
- Vimpelcom (VIP +0.5%) has been upgraded to Buy by Citi. HSBC cut the Russian mobile carrier to Neutral two days ago.
- International Rectifier (IRF +2.3%) has been upgraded to Buy by Citi. Shares sold off yesterday following the chipmaker's FQ2 beat.
- Autobytel (ABTL -5%) has been cut to Hold by Ascendiant Capital.
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Wed, Jan. 29, 12:10 AM| 5 Comments
Tue, Jan. 28, 5:35 PM| Comment!
Oct. 31, 2013, 5:58 PM
- Market-pleasing Q3 reports and better-than-feared guidance from Atmel (ATML +10.6%), Intersil (ISIL +4.2%), International Rectifier (IRF +11.4%), Microchip (MCHP +7.5%), Cavium (CAVM +8.9%), and Skyworks (previous) helped chip stocks trader higher (SOXX +0.6%) on a down day for tech
- The gains followed a difficult month that saw many chipmakers (including a number with strong mobile exposure) provide disappointing Q4 guidance. While the guidance provided by the aforementioned companies wasn't stellar, it was better than feared in light of recent forecasts.
- Atmel guided on its CC (transcript) for Q4 revenue of $350M-$364M, below a $364.9M consensus.
- Intersil expects Q4 revenue of $142M-$148M and EPS of $0.16-$0.18 vs. a consensus of $149.1M and $0.17.
- Microchip, viewed by some as an industry bellwether, was able to deliver in-line guidance: the company expects FQ3 revenue of $463.1M-$492.7M and EPS of $0.57-$0.63 vs. a consensus of $476.9M and $0.59.
- International Rectifier expects FQ2 revenue of $260M-$270M vs. a $265M.1M consensus.
- Cavium guided on its CC (transcript) for 1%-4% Q/Q revenue growth and EPS of $0.29-$0.31; the consensus is for 5% growth and EPS of $0.30.
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