Seeking Alpha


Send Message
View as an RSS Feed
View experienced's Comments BY TICKER:
Latest  |  Highest rated
  • 3 Things That Might Help Qualcomm Grow Larger [View article]
    The writer's states "on the other hand, it does things like cutting 15% of its workforce which suggests that its growth avenues are closing." To assume that the proposed cuts are occurring immediately, rather than gradually, is misleading, and also to assume that the cuts are aimed solely at the staff at San Diego headquarters is misleading.

    Qualcomm acquired several businesses over the past three years, the largest of them located elsewhere. As these operations are integrated into Qualcomm, it is expected that many jobs will become redundant. And there's little doubt that many jobs in San Diego, given the fast growth rate over the past 20 years, could stand a little streamlining. To assume that merely cutting jobs means slower growth, however, is too much of a stretch.

    A better way to view Qualcomm is to see it in the process of transformation. In early years, Qualcomm was concerned mainly with overcoming resistance to its CDMA based technology for voice and data communications. With smartphones becoming widely used in virtually all parts of the world, the focus has shifted to improving performance, speed, reliability, and at the same time increasing its licensing and royalty revenues by staying ahead of the pack from the technology standpoint.

    What should be clear to those who have followed QCOM for many years (I have owned the shares since early 1992) is that the company owns the bulk of proprietary technology related to wireless communication (over 17,000 patents). What should also be clear, however, is that Qualcomm is far from the ONLY company with proprietary technology in this sector. Therefore, it shouldn't be surprising that royalties per unit shipped should be less, and chip sales should reflect competition from other firms. This doesn't mean that Qualcomm has ceased to dominate the wireless part of wireless communication. In that respect, Qualcomm is more like the old RCA Corp., which dominated most radio and TV technology for the better part of 50 years.
    Aug 21, 2015. 01:56 PM | 6 Likes Like |Link to Comment
  • Corning - Clarity In The Automotive Marketplace [View article]
    Automotive glass applications have promise, but probably more promise for all electric vehicles or hybrids, where battery weight is significant. For conventional fuel vehicles, the auto industry heavyweights, especially GM, traditionally resist substituting higher cost components for cheaper ones, even when performance is at stake. I think it will take longer to change window glass than the author believes because of this reluctance in the auto industry itself. BMW was willing to try Gorilla glass in a vehicle where cost matters little, but innovation and new features attract a certain high end buyer.

    Note also that it is a combination of lighter weight components that eventually wins out. The new Ford 150 truck with aluminum doors is an example. Adding Gorilla glass would pull the weight down even more, enabling heavier payloads or higher fuel economy.

    That said, I agree that Corning is one of the best managed companies, and its shares remain reasonably priced for those interest in long term appreciation.
    Aug 14, 2015. 10:55 AM | Likes Like |Link to Comment
  • Isis Pharma Stock Drops On Good News: Re-Evaluating The Bull Case [View article]
    This excellent article may actually have underestimated the potential for ISIS, for the following reasons:

    1. Antisense technology employes methods that are transferable from one drug project to another. That is, similar means for developing and testing new drugs assure that overall development costs are likely LESS than for other technologies, including gene replacement therapy, monoclonal antibodies, etc.

    2. Antisense technology is so specific in its targets that side effects tend to be less than for other types of drugs. This has some real advantages, as the article notes.

    3. ISIS' business plan, allowing profit and royalty sharing in exchange for financing keyed to milestones in the development of a drug, is one of the most effective ways for a small company to engage in drug research without going broke, or without constant resort to issuing additional shares that dilute potential profits. The business plan effectively protects existing shareholders from these adverse events.

    4. ISIS to some may still be a "story stock" because, while its potential products look promising, its costs are met mostly by milestone payments, not by actual income derived from an approved drug. Yet the sheer number of drugs under development (currently about 38), compared with more typical developmental firms with only one or two drugs, greatly reduces risks inherent in most developmental companies.
    Aug 13, 2015. 04:36 PM | 12 Likes Like |Link to Comment
  • Qualcomm: Ignore The Unlikely Speculations And Buy The Stock [View article]
    Ultimately, making your own processor is cost effective only if you can combine it with the modem in a single chip, as is done with Qualcomm Snapdragon chips (if the client wants it combined). If the smartphone manufacturer uses two separate chips instead of one, it uses more space, more power, and probably at a greater cost for the two chips than for a single combined chip. Apple uses two separate chips and aims accordingly at the high end of the smartphone market. It might have trouble competing with, say, Chinese made phones that incorporate Snapdragon combined chips and cost $200 less.
    Aug 3, 2015. 05:31 PM | Likes Like |Link to Comment
  • Qualcomm: The New Normal And What Is Needed For A Re-Rating [View article]
    But what if one of those laid off was the Chairman?
    Aug 3, 2015. 05:21 PM | Likes Like |Link to Comment
  • It's Not Time To Bail On Chevron [View article]
    It's an overreaction to Iranian oil flooding the market because, even if the agreement is approved by all the involved parties (not just the US and Iran), the sanctions are not immediately lifted. That's an inherent part of the proposed agreement and seems not to be understood by many investors (and politicians as well).

    Low oil prices are also a reflection of weak economies, especially in the European Union and the somewhat lower growth now being experienced in China. But because oil is an essential part of economic growth, the low prices have a stimulating effect that somewhat erases the effects of austerity policies that are still adhered to by the European Union. This will help economic growth and in time will lead to greater demand for oil, thereby increasing the price of oil.

    The present low oil prices also deter planned drilling and extraction from new fields. Who wants to spend money to increase oil supplies when the margins are getting too low to cover the risks involved? Lower proven reserves will also eventually contribute to higher oil prices in both domestic and foreign markets. But the future, as far as CVX goes, seems to me tied more to natural gas.
    Aug 3, 2015. 03:46 PM | 4 Likes Like |Link to Comment
  • Key Takeaways Following Chevron's Q2 Results [View article]
    Because CVX is a worldwide company, it's not a good idea to value it simply on the basis of WTI oil prices. To be sure, WTI also implies changes in similar directions for the price of Brent North Sea, but both leave out the prices of domestic and international natural gas, which is becoming a larger share of CVX earnings.

    While oil prices, both WTI and Brent have fallen in recent weeks, and both are now below levels predicted by top oil company executives six months ago (see comments from both CVX and XOM execs), investors should focus more on long term trends in natural gas, especially as it begins to displace coal as a fossil fuel of choice for generating electricity.

    If this point of view is credible, then it follows that Chevron's success or failure in bringing its new gas fields and LNG facilities into production are a better indicator of profits going forward than the price of WTI and Brent.
    Aug 3, 2015. 03:37 PM | 9 Likes Like |Link to Comment
  • Intel 3D XPoint: More Hype Than Coup [View article]
    "What else do you want?" Very simply, a product that can be tested and shipped in mass quantities. Intel has a marvelous reputation for announcing a lot more than it can deliver in a short time frame (sampling this year and large scale production next year). If it sounds too good to be true, it usually is.
    Jul 31, 2015. 02:31 PM | 2 Likes Like |Link to Comment
  • Premarket Biotech Digest: Familial Hypercholesterolemia, Dynavax BLA Track, Earnings [View article]
    If I recall correctly, ISIS and its partner Genzyme, part of Sanofi, tested Kynamro for both types of hypocholesterolemia. The drug could be prescribed off label, especially in cases where the patient has no other recourse. Side effects at the injection site were not significantly different from those occurring with a placebo.
    Jul 31, 2015. 02:25 PM | Likes Like |Link to Comment
  • Re-Examining My Long Position On Corning After Earnings [View article]
    I haven't checked how much stock is owned by the Directors, Wendell in particular. But those with substantial holdings in their company generally try to diversify. I would not be surprised if someone like Wendell were putting funds into tax free New York municipal bonds, where interest payments may average near 3% or more, tax free, and far higher yield after taxes than the GLW dividend.

    Some company leaders like to accumulate a lot of their stock at low prices and then donate it to charities once it has appreciated. I don't know how generous those at Corning are, but this seems to me a good idea for most company directors.
    Jul 31, 2015. 02:09 PM | 1 Like Like |Link to Comment
  • Interview With Energy Recovery CEO Joel Gay [View article]
    When share prices are depressed, a firm with proprietary technology is always vulnerable to a takeover, especially an unfriendly one where the buyer tenders for the shares on the open market. If the bid price is substantially above the market price, say for example, about $5 or more, the Board of Directors would face a breach of fiduciary duty lawsuit if it didn't consider such a bid.

    If I were a driller or an exploration and development o&g firm, I might want to buy the ERI oil and gas related technology. ERI contracts out the actual building of the Vorteq and IsoGen, IsoBoost products, so the cost wouldn't be all that high for an acquirer, even if it were triple the asset value of that part of ERII. On the other hand, with many oil and gas firms strapped for cash in this period of low oil and gas prices, the likelihood of a buyout is slim.
    Jul 31, 2015. 02:01 PM | Likes Like |Link to Comment
  • Re-Examining My Long Position On Corning After Earnings [View article]
    Few would disagree with the potential for earnings growth from a diversity of new or improved products. I see three main causes of its current, relatively low price.

    1. Going back some 20 years, Corning was embroiled in breast implant product liability lawsuits filed against its Dow-Corning joint venture. Despite the fact that the lawsuits were either dismissed or settled to the advantage of Corning (very few resulted in judgments against the joint venture), GLW shares took a beating, from which they still haven't recovered completely. The precedent here is the hit taken by Johnson & Johnson after discovery that some of its containers of Tylenol had been tampered with, leading to a recall of all Tylenol containers and replacement free of charge. The efforts were extraordinary, and ethical, but JNJ shares lagged the market for better than 20 years.

    2. As pointed out in the most recent conference call, price declines in LCD display glass were modest, and apparently less than efficiencies that improved product margins, including the introduction of even thinner glass. The major cause of low profit margins, however, was the weakness in the Japanese yen, relative to the dollar. Over the last few years, the yen has declined from about 78 to 124 to the dollar. Because Corning has substantial investments in Japan, with significant production of display glass, the dollar denominated value of its sales has declined, leading to weak profit margins, albeit from increasing sales.

    3. Despite rapidly growing unit sales of Gorilla glass for smartphones and tablets, Corning shares a problem in common with other component suppliers to this sector. If you look at the companies supplying modem and processor chips, memory chips, etc., what you see is that Apple, the largest buyer of components (other than Samsung, which makes most of its own), is the only company making a lot of money. The suppliers, eager to get a big contract from Apple, get squeezed. Corning is no different. The future for suppliers is predicated on there being several big customers (maybe the newer phone companies like Huawei and Xiaomi, cutting into Apple and Samsung sales, will help) in order to increase overall demand.

    Corning, nevertheless, remains a reasonably good investment at its current price, notwithstanding the above constraints.
    Jul 30, 2015. 01:02 PM | 4 Likes Like |Link to Comment
  • Interview With Energy Recovery CEO Joel Gay [View article]
    Very good summary for what can only be considered a long term investment. Having monitored the company for several years, I wonder whether it is vulnerable to a takeover, especially for the portion of the company that addresses the oil and gas sector.

    Disclosure: Long on ERII, but with a relatively modest investment.
    Jul 29, 2015. 12:39 PM | 1 Like Like |Link to Comment
  • Qualcomm Should Consider Buying Into Some Of Its Rival Chipmakers [View article]
    Qualcomm is the world's largest seller of modem chips for wireless phones and tablets, with greater than a 60% market share. Buying other chip companies, or even taking a major position in a competitor would trigger antitrust investigations. Qualcomm has the largest number of essential patents for modem chips and derives royalty revenue from companies using other than Qualcomm chips.

    Qualcomm is also a major producer of processor chips for cell phones, as a licensee of ARM Holdings, whose basic designs are also incorporated into chips produced for Apple, Samsung, and other firms. Because there is a great deal of competition in this segment, margins tend to be low.

    A restructuring of the company might lead to monetizing some of Qualcomm's valuable patents, most of which have a value of zero on the balance sheet. With all that patent muscle, it is somewhat ludicrous to believe that Qualcomm would be better off buying someone else's technology. Monetizing its own patents, yes. Buying someone else's, except to cover areas that Qualcomm doesn't already reach, is unnecessary.
    Jul 28, 2015. 02:09 PM | 1 Like Like |Link to Comment
  • Use Earnings To Buy Cheap Chevron Shares [View article]
    The key supply variable for world market oil prices is not Iran, as noted above, but overall demand, which currently is sluggish due to lower economic growth in China and the European Union. Growth in oil demand is tied both to petrochemicals and to transportation uses. Growth in gas demand is tied to the relatively low capital cost for gas fired electric generation and to substitution of lower polluting gas for coal.

    Even with lower worldwide economic growth, caused in part by too much austerity in fiscal policies in many nations, the outlook for increased oil and gas demand is reasonably good for the next two to five years. Seen in this perspective, it's likely that Chevron will be able to profit from its long term oil and gas investments, especially the Gorgon LNG project, and will perform at least as well as its peers.
    Jul 28, 2015. 01:34 PM | 5 Likes Like |Link to Comment