Seeking Alpha

gigabob635

gigabob635
Send Message
View as an RSS Feed
View gigabob635's Comments BY TICKER:
Latest  |  Highest rated
  • Intel: The Final Push Before Earnings [View article]
    I expect the market to respond positively to the "beat" announcement, and would not be surprised if after last weeks "tech" selloff, Intel gets an undo bounce.

    However, it has turned its most visible initiative, penetrating the mobile space by selling 40M tablets - into an unprofitable near term investment. By buying the Chinese tablet business (Intel CPU's sold aggressively for under $5) Intel reduced the value of this segment to under $200M annually, within Intel's quarterly margin of error. Its $100M "innovation fund" for Chinese Tablet manufacturers could have its intended effect of jumpstarting Intel's position in the overall supply chain. But don't expect to see net positive returns from that effort for a couple of years. And in no way does this make up for losses due to declining PC's.

    More important - it undercuts the premise of the Moore's Law economic model. With no real competition for innovation (does anyone see AMD in either server or high-end desktop anymore) then spending $3-5B every two years for cutting edge process innovation the market is not demanding is counterproductive. That is the real reason the new fab's are mothballed. Market share is maintained by selling products from older, fully depreciated fab's - not from costly new fabs - especially if the new CPU's swell in size as new cores and cache are added and the actual circuit shrinkage is not in line with the marketing of nodal sizes.

    I see an Intel stockprice bounce after the earnings kneejerk by a market with more money than brains - followed by erosion to below $27 after reality returns.
    Apr 14 11:33 AM | 1 Like Like |Link to Comment
  • Why Is Cisco A Sell Near Term? [View article]
    CSCO is the mainframe of networking. Days are numbered - but how big is the number. Mihir is dead on however - CSCO has touted its "Custom ASICs" as a prime differentiator for is leading edge network products thus enabling CSCO proprietary advanced features often years before the market can embrace them. The current SDN Nexus products use off the shelf BRCM ASICs making them cheaper and easier to turn around from generation to generation. This inevitably hurts the high touch sales model and product margins - leading to a need for corporate restructuring.

    I see no indications Chambers and Rob Lloyd are aligning the sales force in that direction - in fact I see the opposite as CSCO is building for both models and is unclear how or when to cut the cord. Going forward I expect to see many gut wrenching internal changes manifesting as disaffection that will tear apart one of CSCO's biggest assets over the next year as new SDN products are launched, competitors engaged and CSCO tries to navigate its most difficult transition.

    IOT is another challenge for CSCO. It means increasing network connectivity by al lease an order of magnitude over today's levels. But those will need to be low cost commodity connections - something CSCO does not do well. Managing those devices and connections is a new market possibility - and CSCO is investing heavily in this area. I am not holding my breath in anticipation of the kind of breakthrough I would expect from a startup viewing this space and putting up solutions - or a mature offering from a Google, Apple. Amazon or Microsoft - all who have massive data centers, services teams and software operations that radically dwarf CSCO capabilities.
    Mar 22 01:55 PM | Likes Like |Link to Comment
  • Intel And Non-Volatile Memory [View article]
    Still not sold on the timing for this. As you noted, Micron and Intel are heavily committed to flash and seek ways to extend its life despite core manufacturing challenges due to size of NAND flash cells.

    A new approach is needed and I still see memristors as that new approach. I think Micron's recent announcement it is dropping Phase change memory is one indicator that future options for inheriting the flash mantle are narrowing and the delay on the Hynix-HP releases to better prepare operations for conversion to ReRam is another indicator that flash days are dwindling.

    The business question is timing. I would not invest $5B in a 3D flash fab when an alternative product with better performance, lower cost and more capability to integrate directly with current CPU's is on the horizon. Especially as it looks like that product will mature in the same time it will take me to build a new fab.

    However - if I just happen to have access to spare fab capacity and I had process technology a generation ahead of the rest of the market - I would consider pushing a new 3D Flash product out the door if I could get it to market in 6 months and have an 18 month run before new products that I had no IP stake in and have to pay royalties on started taking over. As a manufacturer there are some tough decisions ahead. As a consumer - great times ahead.

    Either way - look at the impact on systems going forward. Today you can buy a USB 128GB Thumbdrive for $50, a 480GB stick of gum sized module for desktop or laptop storage for $280 and a TB 2.5" SSD for $500. With the advent of NVMe and 3D Flash and then ReRAM, we can store a TB or more on a storage CPU that combines performance, durable NVM with network elements to connect an array of devices together at not much more than the cost of dedicated CPU's.

    The look of the data center shrinks dramatically and your Big Data Processing engine gets smaller, cheaper and when available, your environment moves out of costly Data Centers and directly into the field. The point of all this speculation is to ask what happens to the margin of hardware companies with high touch sales models like Cisco, HP, EMC, NetApp as their life blood commoditizes? Seen in this light, rationale for their intense focus on transforming themselves into software driven operations is obvious. I have a few ideas on who succeeds - but clearly the race will be tight and there is a 3 year clock ticking loudly in these boardrooms.
    Mar 17 11:40 AM | 6 Likes Like |Link to Comment
  • Google's Wide Moat Widens Every Second [View article]
    Huh - I like the Ducks too - Hoping Marcus Mariota does well in 2014.

    Problem with the social media thesis as a vector for dominating search is that it is comparing global search entities that act local vs social search that is truly local and seeks to scale up. Where is the revenue engine?
    Feb 27 12:54 PM | Likes Like |Link to Comment
  • Intel: The End Of Moore's Law [View article]
    Trader - I see INTC retaining the bulk of PC business margin going forward. AMD put their eggs into the Gaming Consoles because delays in their ability to deliver to the PC cadence left them vulnerable to attack by INTC parts from fully depreciated fabs. So AMD gets the leftovers from the PC banquet.

    PC's are going away as fast as the mainframe - whose death was widely proclaimed a decade ago. I see the time for the PC to morph into a mobile design tethered to a fully wireless network - but all the signs of that emerging are around us as we see INTC delivering a first generation Edison. Mate a second generation Edison to a second generation Google Glass and we have a very interesting PC offering. I don't see AMD in that evolution though.
    Feb 26 11:18 AM | 1 Like Like |Link to Comment
  • Intel: The End Of Moore's Law [View article]
    While a good point - the other point is that missing the market by 6 months in mobile loses you two generations of end-user product in the market place. To win a future socket - you have to do that on price, as Intel is trying to do by subsidizing critical peripherals.

    Meanwhile - wither goest Merrifield? Its R&D costs need to be capitalized or attached to replacement efforts. Remember - the cost of the socket these days is increasingly in the SW development for the platforms and features integrated into the mobile device and for a new CPU this means a higher development cost.
    Feb 26 11:03 AM | 1 Like Like |Link to Comment
  • Intel: The End Of Moore's Law [View article]
    Russ -

    Your point on the end of the line for Moore's Law is demonstrated by IBM. Moore's Law is a business model built around technical achievement. However the end of Moore's Law comes when the investment ROI no longer enables 100% gains over 24 months. We are approaching that level today for Intel and without guaranteed volume, continued CapEx for highly uncertain market means the rational capitalist - (IBM) will reallocate capital to higher returning alternatives. IBM has looked at a pending $40B investment over 4 years and less than that in revenue alone and opted to focus on new areas of growth they pursue a future of software and services.
    Feb 24 10:56 AM | 6 Likes Like |Link to Comment
  • AMD Shores Up Balance Sheet Amid Product Leaks [View article]
    Agree that true "node names" were hijacked by marketers. My big point is that AMD is behind INTC in process technology and that the GF sale has resulted in less ability to deliver on-time and at scale to the marketplace per their roadmaps and market pronouncements.

    You do bring up a key point - one that I have hit in other responses on INTC centric discussions - we are rapidly approaching the end of Moore's Law, which was always a guiding business model rather than a technical law of any kind. Specifically, with the inability of the industry to realize a breakthrough to economically deploy EUV - the cost of moving to lower device dimensions is increasing faster than the increased volume yield - causing the investment level in the next part generation to soar - even as demand for INTC's PC parts is shrinking.

    This will make things even tougher on AMD as INTC uses its financial mass to compete.
    Feb 23 01:26 PM | 1 Like Like |Link to Comment
  • AMD Shores Up Balance Sheet Amid Product Leaks [View article]
    Completely agree that AMAT is a great company - I worked with Mike Splinter when at INTC. What does that have to do with our discussion about AMD?

    The downside of not owning the fab is your inability to manage through execution problems. AMD's past problem since sale of their foundries to Global Micro has been a succession of delays getting products to market.

    Most advanced design in the world does no good if you cannot deliver on time and at scale to the market.
    Feb 23 01:16 PM | 1 Like Like |Link to Comment
  • AMD Shores Up Balance Sheet Amid Product Leaks [View article]
    Key point has nothing to do with the debt refi - which is accounting fiddly bits - but the fact that even as INTC goes into a second generation FinFET design at 14nm, AMD still is trying to build a FinFET at 28nm. DOes seem like they are a couple of generations behind for the PC space.
    Feb 22 02:32 PM | Likes Like |Link to Comment
  • Is Intel In The Danger Zone? [View article]
    The slowdown in PC's is a factor - but the bigger issue is the pending death of Moore's law. In its heyday, Moore's miniaturization march guaranteed profits to those pushing the ramp on the curve to shrink semiconductors. At 14nm node, INTC is running into a number of challenges to cost effective commercialization - even as demand is dropping for core products. This collision of factors is driving margin pressure as the ramp to a new "node" is more costly than previous generations - thus diminishing the margin yield - even as unit demand dwindles.

    The problem is physics and math. We continue to use eximer lasers at 193nm wavelength instead of extreme ultraviolet free electron lasers to shrink devices. How do you cut lines in a device that are 14nm in diameter using a tool that is nearly 14 times bigger? Very advanced math and complex masks that require multiple steps to apply. This increases expense and challenges the path to increase yields - which is the real transition issue facing INTC after all these years. Meanwhile - the market volume is moving from the 300M PCs sold each year to the 1B+ smartphones and tablets sold each year. Need a breakthrough in ability to deliver to the comms market - or a technical breakthrough that enables advance of Moore's law.

    Remember - Moore's law was a business model not a technical rule. Now the foundation of that business model requires a major technical breakthrough to continue its advance.
    Feb 21 04:29 PM | Likes Like |Link to Comment
  • The Truth About Cisco's Buybacks [View article]
    Completely agree. Came to Intel in 2000 and received a net options grant of 10,000 shares. When options were clearly no longer impactful - (2005) the company started granting smaller numbers of shares outright instead of options - whose floor was continually dropping. After the massive 2006 RIFs I left Intel and the recovery value on my accumulated 29,000 options was $500. My original strike price was at $42 each, and got RIFed with the stock at $20 - so most everything was underwater. Some funny accounting for options grants - but in general they have not paid off well for the recent (after 2000) tech workers in old name tech (HP, MSFT, INTC, CSCO etc), though handsomely for the companies. To that end I wonder how much of the actual buy-backs are actually retired shares that failed to vest due to being underwater?
    Feb 20 02:01 PM | Likes Like |Link to Comment
  • Why Internet Speeds In The U.S. Are So Slow And What The Comcast-TWC Deal Means [View article]
    In most Comcast covered areas they now provide broadband speeds at 50Mbps for average connectivity - which is good by US standards. Korea, Hong Kong, Japan all are small, with very dense population and buildings. It is far easier to cable up a thousand users in a single high-rise vs a thousand homes in a subdivision spanning a square mile or two.

    Completely agree with your point - the US should be world class - and it is not. But where do you want to start. Congress seems to be actively dithering on anything that would smack of leadership. So our infrastructure, schools and medical services grow ridiculously expensive to maintain - while failing to move forward in our ability to serve the public. And for its part the public just stands by and watches as the nation with the most wealth in the world allows everything around it to crumble. l am sure this is how some Romans felt.
    Feb 16 12:02 PM | 1 Like Like |Link to Comment
  • Apple's Sell-Off Is An Opportunity... To Sell [View article]
    Can't buy this premise. Do I sell everything and move to China because they have 3 times the growth rate of the US economy? Who has the better business model and thus better future valuation, AAPL or XOM? You cannot grow forever from a fixed resource base - in this case the market for advanced smartphone users. Between AAPL, Samsung, LG, HTC and now Lenovo you have the bulk of the producers for these phones. Admittedly the next rung is to move many of the top features camera, EMAIL, Social media into phones with less advanced radios targeted at much lower price points for the masses. How do you do this and maintain your high end brand identity - and your ability to coin money at the innovative high end if you are AAPL?

    As for AAPL's lowered guidance - who is generating more profit - AAPL or XOM? In just two quarters with AAPL's lowered Q2 guidance they will still sell $100B in new fruity gadgets and earn $20B. I have to add the results for my top High Tech Friends (CSCO, INTC, MSFT, GOOG) just to eclipse AAPL for a single year. Your's is a case of what have you done for me lately taken to extremes. The better question is when have you let me down?

    Speaking of letting me down, the lowered Q2 guidance is a hopeful sign of things to come from AAPL. Keeping a secret in this business is tough. As they get closer to new product launch there is understandable stall in run-rate sales as potential new users waiting to see if the new unit is better or they can get the same unit for less.

    I do expect more from AAPL in calendar Q4 - but notice that in the past the issue has not been new product or demand but filling that demand while they have the hottest gadget on the block. Innovation to market is not about simply bringing a new thing to market, but bringing it in volume to satisfy pent-up demand.
    Feb 6 11:46 AM | Likes Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    I'll take that bet - and expect to see driverless cars in Manhattan within 30 years.
    Feb 5 07:18 PM | 1 Like Like |Link to Comment
COMMENTS STATS
193 Comments
108 Likes