Nov. 13, 2014, 7:54 AM
- Goldman has upgraded SanDisk (NASDAQ:SNDK) to Buy, while downgrading fellow chipmaker Marvell (NASDAQ:MRVL) to Sell ahead of its Nov. 20 FQ3 report.
- Analyst Mark Delaney expects a weak yen to continue boosting SanDisk's margins (given its Japanese NAND manufacturing ops). He estimates a 10% drop in the currency boosts SanDisk's margins by 200 bps.
- Delaney also thinks SanDisk's Malaysian NAND plans (expected to go live in mid-2015) could lower its tax rate. And like others, he forecasts a balanced NAND supply/demand environment in 2015.
- Regarding Marvell, Goldman is worried about mobile chip weakness - Marvell's baseband chip ops have been hurt by Samsung weakness - and the $1.54B judgment rendered in Carnegie Mellon's infringement suit against Marvell.
- MRVL -2.5% premarket. SanDisk hasn't moved yet.
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. 23, 2014, 3:14 PM
- "I am as optimistic as I've been in a long time," says Don Wordell, noting the pull back in energy prices is a big economic stimulus. His RidgeWorth Mid-Cap Value Fund (MUTF:SAMVX) has topped 97% of peers over the last decade, and the $3.9B fund has returned 2.2% YTD - slightly ahead of the category average.
- His top five picks: SanDisk (NASDAQ:SNDK) is off more than 10% over the last month, but demand for its products is strong and growing. Cigna (NYSE:CI) and Aetna (NYSE:AET) stand to profit as hiring picks up, and with it more people into the healthcare system. Baker Hughes (NYSE:BHI) has been especially beaten down along with the price of oil, but Wordell says this hasn't caused companies to scale back production plans. OshKosk (NYSE:OSK) has been weighed on by sluggish commercial construction, but Wordell says it's about to pick up.
Oct. 17, 2014, 1:09 PM
- "We expect to be in supply allocation and this will constrain our growth in some areas in Q4," said SanDisk (NASDAQ:SNDK) CFO Judy Bruner on the Q3 CC (transcript), discussing her company's light Q4 revenue outlook.
- While SanDisk expects 2014 NAND industry bit supply growth of nearly 40%, its own captive bit supply is expected to grow slightly less than 25%. In 2015, SanDisk expects both industry supply and its own capacity to grow 30%-40%, but the company's "revenue bit growth" is forecast to be at the lower end of that range due to inventory-building.
- Credit Suisse's John Pitzer isn't pleased with SanDisk's reluctance to increase its leverage to better support strategic customers (such as Apple). "While it is difficult to fault SNDK's absolute financial model relative to peers, relative to potential it is deficient." He maintains an Outperform rating, but cuts his target by $20 to $105.
- Morgan Stanley's Joseph Moore thinks SanDisk's cautious approach will eventually pay off. "We would have liked to see upside, but we think these tight conditions are indicative of the broader supply growth challenge that set us up for an improved NAND environment in 2015 wherein gross margins can gradually climb." Likewise, Piper calls SanDisk's supply problem a good one to have.
- SSD segment revenue (boosted by Fusion-io) grew 48% Y/Y in Q3, while embedded revenue (though up 30% Q/Q thanks to Apple) fell 16% Y/Y. Removal product revenue (memory cards, flash drives, etc.) was flat. Embedded sales are expected to be strong in Q4.
- Though above yesterday's AH lows, shares are lower on a day the Nasdaq is up 1.6%.
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. 16, 2014, 4:09 PM
Oct. 16, 2014, 4:07 PM
Oct. 15, 2014, 5:35 PM
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. 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. 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. 18, 2014, 2:59 PM
- Apple's decision to double the storage capacities of its higher-capacity flagship iPhone models to 64GB and 128GB will have a "big long-term impact" on NAND flash suppliers, declares Morgan Stanley's Joseph Moore.
- Moore, who is reiterating an Overweight and $115 target on SanDisk (SNDK +2.9%), suggests Apple's move will have a spillover effect on Android hardware, and ultimately provide "a long awaited source of demand elasticity, without major price declines."
- SanDisk is rallying on a good day for chip stocks. Shares fell in July after the company provided a soft gross margin outlook believed to stem from major volume discounts provided to Apple.
- Moore upgraded SanDisk two weeks ago, while arguing NAND pricing could remain healthy for longer than expected.
Sep. 11, 2014, 10:41 AM| Comment!
Sep. 5, 2014, 9:50 AM
- Morgan Stanley has upgraded SanDisk (SNDK +2.3%) to Overweight, and hiked its target by $5 to $115.
- The firm likes SanDisk's valuation and capital returns, and thinks NAND pricing could remain favorable for longer than previously expected.
- MS also believes Apple (believed to be causing margin pressure) "could signal higher NAND content for the iPhone 6." KGI's Ming-Chi Kuo just predicted Apple will launch a 128GB iPhone 6 model.
- Shares currently go for 15x 2015E EPS.
Aug. 19, 2014, 11:58 AM
- AMD (AMD +1.3%) has jumped into the PC SSD market courtesy of its Radeon R7 SSD line, offered in partnership with Toshiba-acquired OCZ.
- 120GB, 240GB, and 480GB drives are offered, and AMD promises the gamers it's targeting will get high-end performance: The 480GB model respectively has max random read and write IOPS of 100K and 90K - the use of high-end Toshiba NAND flash parts doesn't hurt. The 120GB model goes for $100, and the 480GB model for $290.
- Reviews are positive, though not quite glowing. TweakTown admits the OCZ Barefoot 3 controller used by the drives is "showing its age," but also praises the R7 line's performance and pricing. Bit-tech thinks mainstream users "will be best served" by rival Crucial and Samsung drives, but adds AMD's drives could be a good deal for some performance-focused buyers.
- Meanwhile, SanDisk (SNDK +1%) has launched its Ultra II SSD line, which replaces the older Ultra Plus line. The drives are aimed at mainstream buyers - the more costly Extreme Pro line targets enthusiasts - and come packaged with performance monitoring, cloning, and theft recovery software.
- Pricing is aggressive: SanDisk is charging $80 for the 120GB model, $115 for the 240GB model, $220 for the 480GB model, and $430 for the 960GB model.
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