May. 21, 2014, 5:35 PM
May. 1, 2014, 10:06 AM
- Like Seagate (STX -4%), Western Digital (WDC -6.1%) missed FQ3 revenue estimates while beating EPS forecasts. Also like Seagate, it offered light FQ4 guidance on its CC (transcript): Revenue of $3.5B-$3.6B and EPS of $1.65-$1.75 vs. a consensus of $3.72B and $1.89.
- While Seagate estimates March quarter industry hard drive shipments totaled 138M, Western pegs them at 137M. More importantly, the company expects shipments to fall to 130M in the June quarter.
- Goldman notes hyperscale data center owners (Google, Facebook, Amazon, etc.) are getting more efficient with their storage usage, and that this is affecting both Western and Seagate. Seagate is also dealing with inventory issues at enterprise storage OEMs; Western isn't reporting anything similar.
- With SSDs continuing to encroach on hard drives, Western's enterprise SSD sales grew to $134M (+46% Y/Y, still less than 4% of sales) in FQ3, and are expected to outgrow the broader market going forward. Non-PC applications made up 53% of total revenue.
- Western's ASP fell $2 Q/Q to $58 due to.a mix shift towards console hard drive sales. In spite of the ASP drop, gross margin was 30.1%, flat Q/Q and up 90 bps Y/Y, and above guidance of 29.5%. A 29.5% GM is forecast for FQ4.
- $244M was spent on buybacks, up from $150M in FQ2. Free cash flow was $536M vs. $539M a year ago.
- Hard drive controller supplier Marvell (MRVL -1%) is off moderately.
Apr. 17, 2014, 5:26 PM
- After underperforming yesterday in response to a mixture of in-line and soft outlooks from Intel, ASML, and Linear, chip stocks bounced back strongly following more encouraging numbers from foundry giant TSMC, NAND flash giant SanDisk, and well-diversified Cypress.
- TSMC, seen as a bellwether for chip demand due to a client list that includes most of the world's top fabless chipmakers (Qualcomm, Broadcom, MediaTek, Xilinx, etc.), beat Q1 estimates, issued strong Q2 guidance, and reported seeing healthy sales from mobile clients, and for its advanced 28nm process node.
- SanDisk offered strong margin guidance to go with a Q1 beat. Cypress posted a slight Q1 revenue beat, and issued Q2 revenue guidance that beat consensus at the midpoint.
- Notable gainers: ARMH +3.9%. MRVL +2.2%. CODE +5.1%. RMBS +4.4%. IDTI +3%. ENTR +3.7%. PXLW +6.1%. QUIK +2.4%.
Apr. 3, 2014, 2:33 PM
- With intense price competition for regular LED bulbs acting as a dual-edged sword - it's growing the addressable market, but also pressuring margins - Cree (CREE -1%), Philips (PHG -0.2%) and other vendors are ramping investments in smart bulbs and/or systems that support features such as on/off timing, automatic dimming, and smartphone/tablet control.
- Philips recently expanded its Hue connected bulb product line (includes iOS/Android controller apps) to include a white-only bulb (the Hue Lux) and a wireless wall switch (the Hue tap). Cree has rolled out SmartCast, a wireless commercial lighting system that emphasizes ease of use and low management costs.
- Provided consumers and businesses buy in, Cirrus Logic (CRUS +1.2%) and Marvell (MRVL -1.4%) could benefit. Cirrus sells driver ICs for smart LED bulbs; Marvell offers driver ICs, controller ICs, and related software.
- Previous: Light quality helps LED bulb sales grow in spite of high prices
Apr. 1, 2014, 6:40 PM
- With demand pressured by PC weakness and SSD cannibalization, Gartner forecasts global hard drive shipments will post a 2.9% CAGR from 2013-2018, growing from 552M units to 635.1M.
- High-capacity business-critical drives, beloved by Web/cloud service providers, are expected to fuel much of the industry's growth by delivering a 25.1% CAGR. Western Digital's (NASDAQ:WDC) new Helium drives are aimed in large part at this segment.
- The market for high-margin performance-optimized drives, where Seagate (NASDAQ:STX) has a leading position, is expected to see a -4.9% CAGR. In addition, the segment's ASP is expected to fall 17.1% annually.
- PC drives are a mixed bag: Sales of 3.5" desktop drives are expected to see a -7% CAGR, but 2.5" mobile/notebook drives are seen growing at a 4.2% annual clip. CAGR forecasts for 2.5" and 3.5" consumer electronics drives are respectively at 4.4% and 2.4%.
- Though both Seagate and Western have both launched SSDs, Western has been more aggressive at increasing its flash exposure, as evidenced by the sTec, VeloBit, and Virident deals. Seagate is looking to strengthen its hard drive position through the just-closed Xyratex acquisition. Both firms are pitching 5mm-thin ultra-slim hard drives as an alternative to notebook SSDs.
- Other companies with strong industry exposure: MRVL, LSI, HTCH, OTCPK:TOSBF
Apr. 1, 2014, 4:25 AM
- A district judge has ordered Marvell Technology Group (MRVL) to pay almost $1.54B for breaching two hard disk drive patents held by Carnegie Mellon University.
- The amount is well above the $1.17B that a jury awarded Carnegie in December 2012. The judge, Nora Barry Fischer, increased the payout because she believes that Marvell copied the IP through "known willful infringement."
- However, Fischer rejected Carnegie's requests for double or triple damages.
Mar. 5, 2014, 6:06 PM
- After growing ~60% in 2013 (and fueling global shipment growth of 39%), IDC expects Chinese smartphone shipment growth to slow to ~20% in 2014 and just ~10% in 2015.
- Though only 40% of China's 1B+ mobile users now use a smartphone, IDC's Kiranjeet Kaur notes most users who can comfortably afford a smartphone have already bought one. Plunging low-end Android prices could expand the addressable market in a country whose nominal per capita GDP is around $6K.
- India, which has a sub-10% smartphone penetration rate, still presents a major growth opportunity. But with a nominal per capita GDP of ~$1,500, the country is even more cost-sensitive than China.
- With China slowing down and developed markets living up to their name, IDC expects global smartphone growth to slow to 19% in 2014; that still spells total volumes of 1.2B. Tough competition and the ongoing mix shift towards emerging markets is expected to lead the industry's ASP to fall $27 to $308.
- Smartphone OEMs with strong Chinese exposure: AAPL, SSNLF, LNVGY, ZTCOY
- Chip suppliers: QCOM, BRCM, CRUS, SWKS, RFMD, MRVL
- Chinese carriers: CHL, CHU, CHA
Feb. 24, 2014, 4:14 AM
- Chip makers such as Intel (INTC) and Broadcom (BRCM) are using the Mobile World Congress to demonstrate technology that will increase network speeds.
- One new service is expected to provide download rates of up to 300 megabits a second, four to six times the top speeds of existing LTE networks.
- The companies are out to chip away at the dominance of Qualcomm (QCOM), which holds 9% of the LTE market.
- Other companies that are putting out decent LTE chips include Nvidia (NVDA), MediaTek, Marvell Technology (MRVL), and Spreadtrum Communications (SPRD).
- More on the Mobile World Congress.
Feb. 20, 2014, 5:41 PM
- Aruba Networks (ARUN) expects FQ3 revenue of $178M-$182M and EPS of $0.19-$0.20, largely favorable to a consensus of $174.6M and $0.19. The company has also announced a new $200M buyback authorization, and says the $200M authorized in October has been spent. Shares +4.8% AH. (FQ2 results, PR)
- Marvell (MRVL) expects FQ1 revenue of $870M-$910M and EPS of $0.20-$0.24 vs. a consensus of $848.9M and $0.21. Shares -2.6% AH. (FQ4 results, PR)
- Maxwell (MXWL) expects Q1 revenue to be "flat to slightly up" in Q1 from a Q4 level of $39M. The Q1 consensus is at $39.2M. Shares -7.2% AH. (Q4 results, PR)
- QLIK expects Q1 revenue of $110M-$114M and EPS of -$0.14 to -$0.12, vs. a consensus of $113.2M and -$0.05. Full-year guidance is for revenue of $545M-$555M and EPS of $0.23-$0.27 vs. a consensus of $550.4M and $0.41. Shares +1% AH. Expectations have been muted. (Q4 results, PR)
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Jan. 22, 2014, 6:22 PM
- Though it beat FQ2 (Dec. quarter) estimates, Western Digital (WDC) has guided on its CC for FQ3 revenue of $3.65B-$3.75B and EPS of $1.80-$1.90, mostly below a consensus of $3.73B and $1.95. The company blames a seasonally weaker hard drive market and lower factory utilization.
- Western is down 2% AH. Archrival Seagate (STX), which reports on Monday, is down 2.1%, as is hard drive/SSD controller supplier Marvell (MRVL).
- Western estimates the total addressable market (TAM) for hard drives was 142M in FQ2; that's slightly above guidance for TAM to be roughly flat with an FQ1 level of 139M. Gaming was an area of strength, no doubt thanks to the Xbox One/PS4 launches.
- FQ2 gross margin was 30.1%, +30 bps Q/Q and +140 bps Y/Y, and slightly better than guidance. FQ3 gross margin is expected to be near the midpoint of Western's 27%-32% model range (implies 29.5%).
- $150M was spent on buybacks, and 54% of revenue came from non-PC applications. ASP rose by $2 Q/Q to $60, thanks to a stronger mix of branded drive and distributor sales.
- FQ2 results, PR, prepared remarks, datasheet
Jan. 16, 2014, 4:59 PM
- Pantas Sutardja, Marvell's (MRVL) CTO and the brother of CEO Sehat Sutardja, has resigned. Zining Wu, until now responsible for Marvell's storage chip R&D efforts, is replacing him. (PR)
- The announcement comes shortly after Marvell stated in a legal filing it isn't holding talks with P-E firm KKR (has disclosed a 6.8% stake) regarding a buyout or other major transaction.
Jan. 16, 2014, 10:34 AM
- Two weeks after KKR disclosed a 6.8% stake in Marvell (MRVL -1.7%), Marvell insists it isn't talking with the P-E firm about a buyout or any other major transaction.
- In November, Bloomberg reported KKR had discussed taking Marvell private in partnership with its founding family.
- Marvell's comments come after U.S. district judge Nora Barry Fischer denied a Marvell request to cut a $1.17B Dec. '12 jury verdict in Carnegie Mellon's infringement suit by more than half.
- Fischer rejected Marvell's assertion that Carnegie shouldn't receive damages for chip sales that occurred before its suit was filed because the university waited too long to do so. Marvell has begun phasing out the use of Carnegie's IP, but sales of infringing hard drive controller chips will continue this year.
Jan. 10, 2014, 9:44 AM
- Microsoft (MSFT +1.2%) has been upgraded to Overweight by Jefferies. The upgrade follows a moderate drop caused by disappointment Alan Mulally is no longer a CEO candidate.
- BlackBerry (BBRY +1.1%) has been upgraded to Sector Perform by RBC. Shares have already seen a big run-up since the company's FQ3 report.
- Baidu (BIDU +1.3%) has been upgraded to Buy by Maxim.
- Micron (MU +0.2%) has been upgraded to Buy by Jefferson Research, and started at Buy by Argus and Sterne Agee. The moves come two days after shares blasted off in response to a very strong FQ1 report (I, II).
- Splunk (SPLK -2.1%) has been cut to Equal Weight by Barclays. The downgrade shortly follows a UBS upgrade to Buy. SA Pro contributor ZNCapital recently took aim at Splunk's valuation.
- Ambarella (AMBA -1.8%) has been cut to Hold by Deutsche. Needham cut the chipmaker to Hold two days ago.
- Marvell (MRVL +1.9%) has been started at Buy by MKM.
- Qlik (QLIK +2.1%) has been upgraded to Buy by Jefferies.
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