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Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Oct. 27, 2014, 8:17 AM
- "Our business continues to generate strong operating cash flows, enabling us to invest in our strategic growth initiatives while also returning capital to investors," says CFO Ron Foster, also noting the company in FQ1 laid out $389M to eliminate its 2031B convertible notes and their associated dilution.
- At Friday's closing price of $31.06, $1B in buybacks would eliminate 3% of the float.
- MU +2.6% premarket
Oct. 20, 2014, 9:37 AM
- Pac Crest: "We are upgrading Micron (MU +1%) to 'Outperform' as our recent checks suggest DRAM pricing remains strong. Discussions with Samsung and Hynix suggest that DRAM wafer capacity will remain relatively flat at both companies."
- The firm also expects a balanced supply/demand environment for both DRAM and NAND in 2015. Its target is $37.
- JPMorgan upgraded last Wednesday. Both ratings hikes comes a month after Micron forecast a low-single digit DRAM ASP increase for its November quarter.
- Micron had fallen more than once on concerns about Samsung's DRAM expansion plans; Samsung tried to allay those fears last week.
Oct. 16, 2014, 6:16 PM
- SanDisk (NASDAQ:SNDK) guided on its Q3 CC for Q4 revenue of $1.8B-$1.85B, below a $1.88B consensus. In addition, gross margin (believed to be pressured by Apple sales) is expected to be in a 47%-49% range. GM was at 49% in Q3, at the high end of a 47%-49% guidance range.
- $467M was spent on buybacks in Q3, helping EPS soundly beat estimates in spite of a slight revenue miss. R&D spend rose 18% Y/Y to $201.8M, and sales/marketing spend 46% to $97.6M. Both spending figures were boosted by the July closing of the Fusion-io deal.
- NAND rival Micron (NASDAQ:MU) is off slightly. Micron received 27% of its August quarter revenue from NAND, and 68% from DRAM.
- Q2 results, PR
Oct. 15, 2014, 8:54 AM
- JPMorgan upgrades Micron (NASDAQ:MU) to Outweight from Neutral, saying it should benefit from industry consolidation and strong demand in memory markets.
- Near-term server and PC upgrade cycle should improve, and mobile and gaming should drive long-term demand for NAND and DRAM.
- Price target $36. Shares -0.9% premarket to $27.14.
Oct. 14, 2014, 6:07 PM
- Intel's (NASDAQ:INTC) Data Center Group saw broad-based strength in Q3, CEO Brian Krzanich noted on the CC. Enterprise sales rose 11%, networking 16%, HPC 22% (good for MLNX), and cloud 34%.
- He added Intel's new Grantley Xeon CPUs are seeing strong uptake, and that the chip giant now has 35 custom Xeon SKUs for various clients. Facebook, eBay, Microsoft, and other Web giants have been avid buyers of custom Intel server CPUs.
- 15M tablet CPUs were shipped in Q3; Intel still expects 40M in 2014. The company promises a "substantial improvement" in mobile chip profitability next year as contra revenue payments drop, but doesn't expect the segment to turn profitable.
- Aside from a stabilizing market, Intel thinks PC division sales benefited from share gains (no doubt against AMD) and higher inventories (they were depressed a year ago). A couple of analysts pressed Intel on inventories; the company insists customers have an "appropriate amount." A mix shift towards Bay Trail Atom CPUs pressured ASPs.
- On CNBC (video), CFO Stacy Smith noted developed markets are still faring better than emerging markets, and argued Microchip (responsible for the warning heard round the chip world) "[plays] in different segments." Linear Technology, which has more customer overlap with Microchip, just missed estimates and issued light guidance.
- INTC +2.7% AH. AMD +1.2%. MU +1.8%.
- Q3 results, details.
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 14, 2014, 12:35 PM
- Samsung Electronics (OTC:SSNLF) CEO Kwon Oh-hyun: "We'll have to wait and see how things will go next year, but there definitely will not be any game of chicken."
- Micron (MU +2.6%), SanDisk (SNDK +2.3%), and SK Hynix (OTC:HXSCL) must be happy to hear that. Micron and Hynix sold off in late July after Samsung hiked its 2014 DRAM production forecast, and all 3 names sold off last week after Samsung announced plans to spend $14.7B on a new chip fab.
- Cowen's Tim Arcuri recently downplayed concerns about the fab's impact on Micron. "We don’t put a ton of stock in this announcement as we question when – or even whether – this fab will ultimately be built, and we also question the market’s assumption that this would be DRAM."
- Bernstein pounded the table yesterday for Micron, highlighting a valuation of ~6x 2015E EPS and arguing fears about its exposure to a chip inventory correction (following Microchip's warning) are overblown. "The memory cycle has been more supply driven rather than demand driven ... if there is any short-term demand weakness memory makers can just decide to hold on to inventory as opposed to selling at a suboptimal price."
- Micron and SanDisk are both faring well on a strong day for tech.
Oct. 10, 2014, 9:59 AM
- Microchip's (MCHP -12.5%) calendar Q3 warning, which was accompanied by a declaration that it believes "another industry correction has begun and that this correction will be seen more broadly across the industry in the near future," is taking a heavy toll on chip stocks (SOXX -5.5%).
- Intel (INTC -4.2%) and many other chipmakers have joined the several firms that sold off AH yesterday in going in the same direction as Microchip: MU -5.8%. FSL -8.5%. BRCM -3.6%. SWKS -7.5%. RFMD -6.2%. XLNX -4.9%. MXIM -5%. AMBA -5.5%. IDTI -6.7%. CAVM -7.4%. AVGO -10.2%. SMTC -4.3%. SYNA -4.1%. POWI -6.9%.
- Chip equipment makers are also getting hit: AMAT -3.5%. KLAC -3.3%. LRCX -2.3%. UTEK -2.5%. KLIC -2%.
- As Microchip noted in yesterday's warning, the company's very diversified customer base, together with its recognition of distributor revenue on a customer sell-through basis rather than a distributor sell-in basis, often allow it to see industry changes before peers.
- The microcontroller vendor added its warning was driven by a September decline in sales to Chinese clients, and observed it has typically "returned to sequential revenue growth after two quarters" during past downturns.
- Chip stocks have had a good run over the last 12 months, aided by healthy mobile demand and the industry's consolidation wave.
Oct. 8, 2014, 5:09 PM
- IDC estimates global PC shipments were down 1.7% Y/Y in Q3 to 78.5M, better than an expected 4.1%. The decline is even with Q2's rate, and better than Q1's 4.4% and Q4 2013's 5.6%. Gartner estimates shipments fell only 0.5%.
- Developed markets continue faring better than emerging markets still getting hit by tablet cannibalization. IDC thinks U.S. shipments rose 4.3%, a bit slower than Q2's 6.9% growth. EMEA grew, while Asia-Pac (exc. Japan) declined. Japanese growth remained "deeply negative."
- The corporate migration from Windows XP to Windows 7 (following MSFT's ending of XP support) is still providing a lift, as is a soft tablet market. However, IDC cautions demand for "large commercial refreshes" remains low.
- Notably, Apple (NASDAQ:AAPL) finally managed to crack IDC's list of the top-5 global vendors: With the help of a strong U.S. market and Mac price cuts, Apple's unit share rose an estimated 60 bps to 6.3%. Revenue share is likely above 10%, given Apple's calendar Q2 Mac ASP was $1,255. U.S. unit share was at 13%.
- The four companies ahead of Apple all grew their shares as well, gaining ground against vendors with less scale: Lenovo (OTCPK:LNVGY) was at 20% (+230 bps), H-P (NYSE:HPQ) at 18.8% (+130 bps), Dell at 13.3% (+140 bps), and Acer (OTC:ACEIY) at 8.4% (+100 bps).
- Intel's (NASDAQ:INTC) Oct. 14 Q3 report should provide additional color on PC demand going into the holiday season.
- Related tickers: AMD, NVDA, MU, STX, WDC, HTCH
Oct. 6, 2014, 9:25 AM
- Micron (NASDAQ:MU) is under pressure after Samsung announced it's spending $14.7B to build a giant new chip plant. Construction will start in 1H15, and is expected to be finished in 2H17.
- Electronics CEO Kwon Oh-hyun: "Our investment into the new fabrication plant will influence the shaping of Samsung’s future semiconductor business." Samsung (like peers) has seen its mobile DRAM and NAND flash sales grow rapidly over the last two years.
- The company says capacity could be allocated to either memory or logic IC manufacturing, depending on demand. Samsung is the world's biggest DRAM and NAND flash manufacturer, but also has a growing foundry business that's hoping to grab share following next year's 14nm transition.
- Micron sold off in July after Samsung hiked its 2014 DRAM production forecasts, but eventually recovered.
- Aside from Micron, Samsung's plant could have an impact on NAND giant SanDisk (NASDAQ:SNDK), foundry kingpin TSMC (NYSE:TSM), and DRAM/NAND rival SK Hynix (OTC:HXSCL -5.1% in Seoul)
- Update (10:01AM): SanDisk is now down 1.5%. Micron is down 2.5%. TSMC is up 0.3%.
Sep. 26, 2014, 5:00 PM
- Several firms have hiked their Micron (MU +6.8%) targets following the memory giant's FQ4 beat and above-consensus FQ1 guidance. Shares closed about a dollar below a July high of $34.85.
- Jefferies' Sundeep Bajikar (PT hiked to $42) says the numbers are "likely to increase the probability of ~$4 EPS power in investors’ minds, and help closet bears embrace permanent DRAM industry changes with less fear." He forecasts $3.4B in FY15 (ends Aug. '15) free cash flow, up from $2.6B in FY14.
- Drexel Hamilton's Rick Whittington takes Micron's performance as proof the company has sidestepped Samsung's DRAM capacity hike. "Samsung’s DRAM output shock last month appears absorbed as computing upsides have accounted for the increased bits” — and it is set to benefit from rising complexity of DRAM production."
- Nomura's Romit Shah observes guidance for low-single digit DRAM ASP growth is much better than his prior forecast for a 4% drop. BofA/Merrill reports (citing talks with management) some OEMs "want to purchase DRAM at a fixed price (no cuts) for the entirety of 4Q14 due to shortage concerns."
- On the CC (transcript), Micron forecast 2015 DRAM industry bit supply growth will be in a low-to-mid 20% range, down from a 2014 level of ~30%. Moreover, high-teens to low-20s growth is expected in later years, as restrained capex keeps a lid on output.
- Industry NAND output is expected to grow at a high-30s to mid-40s clip in 2015, following high-30s to low-40s growth in 2014. 3D NAND investments and interest in addressing strong mobile/SSD demand is fueling the growth.
- SanDisk (SNDK +2.3%) followed Micron higher.
Sep. 26, 2014, 9:14 AM
Sep. 25, 2014, 5:06 PM
- Micron (NASDAQ:MU) guides in its earnings slides (.pdf) for FQ1 revenue of $4.45B-$4.7B, above a $4.36B consensus. The company has set an FY15 (ends Aug. '15) capex budget of $3.6B-$4B, up from an FY14 budget of $2.8B-$3.2B.
- DRAM Q/Q bit growth was 4% in FQ4 vs.guidance for low-single digit growth. ASP was flat (in-line with guidance), as was cost/bit (guidance was for a low-single digit drop).
- Trade NAND bit growth totaled 13%, boosted by mobile sales and in-line with guidance for low-to-mid teens growth. ASP fell 6%; guidance was for a low-to-mid single-digit drop. Cost/bit -2% vs. guidance for flat cost/bit.
- FQ1 DRAM guidance: Mid-to-high single digit bit growth; a low-single digit ASP increase; a low-single digit cost/bit decline. Trade NAND guidance: High-teens bit growth, low-to-mid single-digit ASP decline; low-single digit cost/bit decline.
- Micron expects R&D spend to rise to $395M-$405M in FQ1 from $358M in FQ4. SG&A spend is expected to rise to $195M-$205M from $180M.
- DRAM made up 68% of FQ4 revenue, NAND 27% (trade NAND was 25%), NOR flash 3%, and everything else 2%.
- MU +4.6% AH. FQ4 results, details.
Sep. 25, 2014, 4:30 PM
- Thanks to a $66M charge related to a patent license deal with Tessera, Micron (NASDAQ:MU) had an FQ4 gross margin of 32.8%, up from 24.9% a year ago but down from 34.4% in FQ3. EPS would've been higher without the charge.
- Elpida cost cuts allowed SG&A spend to fall 7% Y/Y to $180M. However, Elpida and SSD/NAND controller investments fueled a 34% increase in R&D spend to $358M.
- Operating cash flow totaled $1.35B (+88% Y/Y), and capex $1.33B. For the whole of FY14, op. cash flow was $5.7B (up over 3x Y/Y with the help of Elpida).
- Micron ended FQ4 with $5.35B in cash/investments, and $6.6B in debt.
- NAND flash rival SanDisk (NASDAQ:SNDK) is up moderately in response.
- FQ4 results, PR
Sep. 25, 2014, 4:05 PM
- Micron Technology (NASDAQ:MU): FQ4 EPS of $0.82 beats by $0.01.
- Revenue of $4.23B (+48.9% Y/Y) beats by $80M.
- Shares -3.79% AH.
Micron Technology Inc and its subsidiaries manufactures semiconductor systems. The Company's products include DRAM, NAND Flash, and NOR Flash, is the basis for solid-state drives, modules, multi-chip packages, and other system solutions.
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