Seeking Alpha


Send Message
View as an RSS Feed
View experienced's Comments BY TICKER:
Latest  |  Highest rated
  • The Semi-Conductor Space - Part 1: Focus Qualcomm [View article]
    The growth rate assumptions for Qualcomm are incorrect and not based on any fundamental or market data. Qualcomm has been recording increases in operating earnings averaging better than 15% for several years. This is not factored into any of the tables or calculations that I read in the article.

    Furthermore, since Qualcomm owns the majority of wireless communication patents deemed essential for virtually all wireless systems in operation today or contemplated in the near future, Qualcomm has a potential royalty stream (with margins near 90%) that no other competitor can claim. The desirability as an investment is much better than for companies whose profits are based primarily on product margins, not royalties.

    Qualcomm should be compared with the old RCA Corp. during the 1920's through the 1950's, when RCA had most of the AM radio patents and many key TV and color TV patents.

    Taking these factors into consideration gives one an entirely different perspective than that proposed in the article. Qualcomm, on the basis of its fundamentals, should be trading close to a price-earnings ratio of 18 to 20. Considering that the company has no long term debt and a very large cash balance, even a P/E or 18 to 20 could be considered on the low side.
    Mar 21 01:29 PM | 3 Likes Like |Link to Comment
  • Intel - Skeptics Beware, Analysts See Upside [View article]
    Ugh! Intel is performing like it is the General Motors of Silicon Valley. They have a lot of muscle, and they make a lot of mistakes. I wouldn't invest in either.
    Mar 18 11:50 AM | 3 Likes Like |Link to Comment
  • Intel Will Win In Manufacturing Tech, Now What? [View article]
    Your view that "Intel's modem and processor solutions may become superior to Qualcomm by 2015" is pure conjecture. It takes years of experience, not just good patents, to make modem and processor chips that really work well and consume low amounts of power. Intel may have better process technology and may be first with 14nm chips, but that's not enough to make superior performing chips.

    Additionally, it's not just a matter of having a single good performing chip. Qualcomm has many different chips with different performance and price points, suitable for many different markets. Intel has a long way to go here -- longer than just a year.
    Mar 17 05:00 PM | 4 Likes Like |Link to Comment
  • Memory OPEC - Part 2 - The World Turned Upside Down! [View article]
    I don't understand the writer's points. Is he saying that buying SanDisk is a good idea because the price-earnings ratio is well below what it should be, given the expected earnings growth? Is he saying MU and SNDK are not good investments because they try to control supply?

    The market for NAND flash memory is indeed limited to a few large companies, partly because companies like SanDisk have a lot of patents that protect it from unscrupulous competition and illegal use of intellectual property. In this connection, SanDisk and Toshiba together are suing SK Hynix for illegally using trade secrets.

    What is confusing about the writer's argument is that he apparently doesn't understand that patents themselves assure fewer participants. Secondly, even a monopolist recognizes a relationship between price and volume. What SanDisk officials have said repeatedly is that they intend to expand supply only to the extent that it doesn't result in another glut or oversupply, as has occurred several times over the last 10 years, partly as a result of Samsung attempting to gain market share. An oligopolist will not allow selling price to decline faster than cost of production. That is the policy that, it would appear, the major producers of NAND flash memory are following. That is neither irrational nor illegal. It's just common sense if the companies involved are interested in maximizing profits.

    Additionally, it has been shown that demand for NAND flash is highly elastic, meaning that lower prices do result in higher sales. It would make no sense for oligopolists or monopolists not to recognize this characteristic of the NAND flash market. And their policies so far show they understand the relationship.
    Mar 14 05:24 PM | Likes Like |Link to Comment
  • Corning: A Perfect Case Study On When To Sell [View article]
    Could not disagree more with the writer's entire view. GLW has relatively low price to book value, especially when compared to other stocks in the tech sector. The company is a leader in glass technology as well as in related areas such as ceramic substrates for catalytic converters. The LCD business is viable, notwithstanding lower prices for TV displays and the likelihood that demand for TV with larger screens now appears to be increasing. And is there no benefit from stock repurchases along with dividend increases? Though any stock could drop 10 to 15% in a down market, there appears to be no compelling reason why GLW would drop more than other tech stocks, much less the market in general.

    There are, however, several reasons, including the company guidance, why the stock could move up 10%. That, together with the dividend, gives a return on investment that would satisfy most investors. Though I do not hold any shares at the moment, I have followed the stock and previously owned it after breast implant lawsuits brought the price down. Though the suits have been settled long ago, that alone has kept the price down.
    Mar 13 10:29 PM | 1 Like Like |Link to Comment
  • Pfizer's Coming Superdrug [View article]
    Of course there are other methods for treating breast cancer, both ER+ and non-estorgen receptive. Among these are antisense drugs that bind chemically with a gene that is expressed in patients with both type breast cancers. Though these drugs are still in testing stages, as is Pfizer's, there is little reason to believe that Pfizer has a more effective drug at this point.
    Mar 12 01:40 PM | Likes Like |Link to Comment
  • Intel: Never Fall In Love With A Stock [View article]
    Intel has a history of promising a lot of products and new technologies but not delivering until much later. Its NAND flash units are competitive in certain segments of that market but are so far not sterling performers when compared to similar products from Samsung, SanDisk, and even former joint venture partner Micron. Intel's recent announcement on NVMe sounds great, but if the announcement is like other PR's we seen over the years, it won't mean much in terms of additional profits.

    Companies develop a corporate culture that's very hard to change, or that changes only slowly. Intel's culture is wedded to its x86 architecture and the hope that x86 is still viable in a period when more and more users depend on the cloud, which may or may not require x86. A prime example of the effect of a corporate culture is illustrated by Kodak. The founder, George Eastman, built the company around an advertising slogan, "You press the button. We do the rest." In other words, Kodak was successful in placing itself as the middleman in film processing and printing – until the advent of digital photography, where the film became a reusable flash memory and the processing and printing were done by the users. Kodak had some of the early essential patents on charged coupled devices, which are at the heart of digital photography. But company management couldn't see how digital would help them make their usual middleman profits, so it let others take over this segment (Sony, Canon, Nikon, SanDisk, etc.). The company eventually went bankrupt and is now emerging from bankruptcy as a smaller, relatively insignificant player in commercial printing.

    In 1998, Kodak paid $250 million to buy the dry x-ray business from a company that was spun off from 3M. This was a mature business that went nowhere and has been almost totally replaced by digital x-rays that create an image with a charge coupled or CMOS device and save it on NAND flash memory cards. For the same $250 million in 1998, Kodak could have purchased the entire outstanding shares of SanDisk, a company now worth some $15 billion, whose main business is NAND flash memory.
    Mar 12 01:29 PM | 2 Likes Like |Link to Comment
  • 2014 Is Shaping Up As A Tough Year For Qualcomm [View article]
    The writer underestimates the portion of earnings from royalties. Royalties include funds from competitors such as Mediatek, which uses QCOM patents routinely in its baseband chips, and possibly in its processors as well.

    The proportion of handsets that are smartphones is growing, which means that even if total handset sales level off, smartphone royalties to QCOM are likely to increase. There is nothing in the company's recent guidance (usually conservative) that would indicate otherwise.

    Growth in tablets, however, is slowing down, contrary to the writer's assertion. QCOM has a small position in tablets simply because many tablets are equipped only for Wi-fi, not for direct access via a wireless service provider. And by far the largest number of tablets sold are still iPads, which use Apple's own processor. To claim that the tablet market changes are a negative for QCOM is simply misleading.

    Since the writer is short QCOM, he obviously needs to generate some reasons for his speculations. On a larger scale, hedge fund manager Bill Ackman also has been short Herbalife and, according to New York Times reports, is doing everything he can to make the stock price go down (it's going up, nevertheless). At least the writer notes he's short QCOM.
    Mar 10 01:33 PM | 2 Likes Like |Link to Comment
  • Intel An Embarrassment? No. [View article]
    Intel, like GM, has seen better days. Both companies are bogged down with an old culture that impedes gaining market share, or even maintaining existing market share. Neither is a good investment.
    Mar 7 09:19 AM | 7 Likes Like |Link to Comment
  • Clean Energy Fuels - It's All About The Volume, Stupid! [View article]
    I see arguments pro and con for each of the views. I also read the financial statements and related comments from management. Seems to me that CLNE faces one major hurdle, which is the price of natural gas. Unless they have long term contracts, they may have to pay more for gas, especially if we get more winters like this one, where natural gas prices are pushing $5.00.

    Certainly an investor has to acknowledge risks in a firm that goes from quarter to quarter and year to year without a profit. Federal tax credits being eliminated don't help either. I like the natural gas concept for fleet use but hesitate to make an investment in CLNE or any other supplier at this point.
    Mar 6 11:04 AM | 1 Like Like |Link to Comment
  • Intel: The Best-Case Scenario [View article]
    If Intel wants to be successful in mobile handsets and tablets, then it must cut prices to the bone and forego its customary 61% gross margins. Thus, if Intel really gets its foot in the door in wireless (a challenge in itself, based on the performance of competing chips from Apple, Qualcomm, Mediatek and others), it cannot possibly earn enough per share to drive up the current share price.

    The more important (and often ignored) issue is that modern day users no longer require the complexity inherent in the x86 chips. Intel, in its effort to do the same old things the same old way, notwithstanding gains in power efficiency, is still left in the dust.
    Mar 3 09:06 AM | 4 Likes Like |Link to Comment
  • Intel's New Mobile Processors Revealed [View article]
    ". . . if it is priced aggressively against Qualcomm's mid-range and low-end solutions (think Snapdragon 400/600), it would actually be quite compelling . . ."

    . . . and it would give Intel minuscule (if any) profit margins.

    The writer still isn't keeping up with the advances made by Qualcomm, especially those announced today in Barcelona at the mobile wireless conference. Intel isn't a generation behind. It is hopelessly, perhaps more than three years behind.

    Great article though, as an Intel PR piece.
    Feb 24 01:41 PM | 12 Likes Like |Link to Comment
  • Why Intel Will Move Up In 2014 [View article]
    Though Intel retains its lead in process technology, it is generations behind in chips using that technology for mobile devices. Its lower power consumption processors may entice Apple to continue using Intel processors in its computers. But that is truly a different market from smartphones and even tablets.

    Smartphones and tablets dominate a market where the major activity is wireless communications for both voice and data. The reason Intel has not been successful here (so far, anyway) is that it has no processor chip integrated with the front end radio chips and the power management chips. The leader in this category continues to be Qualcomm, which introduced even more advanced system-on-chips at the Mobile World Congress this week in Barcelona.

    The objective for all chip designers or manufacturers is not simply to get everything on a single silicon wafer (small size and less power consumption) but to create a seamless compatibility with the numerous service providers (GSM, CDMA, HSPA, LTE) and all the frequency and system variations that go with that compatibility. Intel is far behind all other major chip providers in this category. That includes not only Qualcomm but fast growing Mediatek, Samsung, and of course, Apple, so far the only company with a 64-bit processor on the market. (Qualcomm introduced a low priced 64-bit integrated processor today in Barcelona, but it's not yet on the market.)

    As I've noted in previous comments on related SA articles, because Intel still doesn't have an integrated SoC, and because Intel has determined to go ahead with processors built on its long standing x86 architecture, the end result will very likely be years of reduced profits caused by pricing its chips low enough to attract more business, but too low to generate adequate profit margins. The shares are destined to remain in their current trading range for at least another year.
    Feb 24 10:03 AM | 4 Likes Like |Link to Comment
  • Mediatek's Rapid Growth May Be A Headwind For Qualcomm In 2014 [View article]
    "Hopefully Qualcomm takes Mediatek threat seriously and thinks up a good strategy to compete."

    In one word: Royalties. To produce a competitive system on a chip, including the RF part, Mediatek and very likely all other competitors as well will be paying royalty fees to Qualcomm. Though QCOM would make more money selling chips AND getting royalties, the royalties by themselves are a very high profit, high margin business.
    Feb 23 07:27 PM | Likes Like |Link to Comment
  • Qualcomm's Regulatory Troubles In China Cast A Shadow Over 4G Opportunity [View article]
    It's incorrect to claim that firms selling devices using TD-SCDMA didn't have to pay royalties. They did have to pay, but most of them ignored the licensing and royalty requirements. Qualcomm explained this at its November analyst day conference in New York, noting that since the firms making TD-SCDMA devices were also making LTE devices (fourth generation) for domestic sales and exports, it would now be easier to obtain the required payments.

    As to the pending anti-competive claims, the Chinese may have difficulty explaining why the royalty rate charged by Qualcomm for Chinese devices sold in China is LESS THAN the going rate for non–Chinese companies doing business in China or elsewhere. In short, it's a political move by the Chinese, which runs up against companies from countries, like China, that are members the World Trade Organization, which can level sanctions for unequal treatment.

    A better proxy for future earnings is the actual performance of Qualcomm chips, sold in China and most other countries, compared to the mostly inferior performance of competing chips.
    Feb 21 04:04 PM | 5 Likes Like |Link to Comment