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  • Qualcomm: What Massive Job Cuts Mean For Long-Term Investors [View article]
    The statement that ". . . there are no major shifts occurring within its business/industry" needs to be examined closely. Numerous shifts have taken place in the industry as it moves from 2G and 3G to 4G and possibly 5G. Qualcomm has the bulk of essential patents for 3G, along with CDMA related patents for 2G. Qualcomm also has essential patents for 4G, especially the antenna patents acquired when Qualcomm bought Flarion a few years ago. Qualcomm is still years ahead of its competitors in baseband technology (modem and related chips). And virtually all smartphones built today depend at least in part on some Qualcomm patented technology.

    The company could easily sell off at least part of its chip technology section that deals mainly with 2G and 3G technology. That strategy would be akin to the earlier sale of OmniTRACS, a division that made the first satellite communications products that were installed in truck fleets (and provided key financing for CDMA r&d). Put another way, Qualcomm could consider cutting back on some of its r&d without permanent injury, because communication technology is changing to the point where no single company has the majority of patents, as QCOM had with regard to CDMA and its derivatives.

    Apple, by developing its own ARM based processor, is able to make its phones and tablets unique, and not compatible with other ARM based processors, such as the Snapdragon series made by Qualcomm, or the various models introduced by MediaTek. This gives Apple some control and exclusivity that helps retain existing customers. However, it creates a problem for Apple, in that Apple cannot make a combined system on chip, housing both the modem and processor, as Qualcomm does for the majority of its customers. An SoC consumes less power and takes less space, and in fact may be less expensive than separate components with comparable performance. Qualcomm SoC design is more advanced than that of Samsung or MediaTek, which helps explain why the Galaxy Note 5 will have a Snapdragon SoC instead of one made by Samsung.

    Intel faces the same problem with its processors, based on what is almost an archaic x86 architecture. The Intel chips require separate baseband chips. The only integrated chip Intel provided so far did not have the ability to work on all frequencies/bands, as required for virtually all smartphones made today – CDMA, WCDMA, Edge, and 4G in two varieties, as well as TD-SCDMA in China. Intel really has nothing to compete with a Qualcomm SoC.

    Meanwhile, there are numerous new pathways requiring new chip designs -- for automotive, health monitoring, machine to machine, and the Internet of Things. Qualcomm, now the largest employer in San Diego, increased the number of its employees about fourfold in a period of ten years, to its present level of 31,000. It's very likely that portions of the workforce can be cut or transferred to a new company separate from Qualcomm, and without damaging the firm's core mission, which is designing better and more efficient ways to communicate wirelessly.

    So I take issue with the notion (unproven, to say the least) that cutting back on the number of employees (over time, not immediately) can wreck a company. In fact, it can help redirect the company into more productive avenues.
    Jul 23, 2015. 01:09 PM | 10 Likes Like |Link to Comment
  • Why Job Cuts Are Bad For Qualcomm [View article]
    "Cutting this jobs is like chopping off a tree's roots . . ." Or it could also be seen as cutting off the dead wood on the branches.
    Jul 22, 2015. 02:18 PM | Likes Like |Link to Comment
  • Why Job Cuts Are Bad For Qualcomm [View article]
    Why publish speculative views when many of the answers will be revealed by Qualcomm at its third quarter conference call, scheduled in less than 24 hours from now?
    Jul 21, 2015. 05:06 PM | 5 Likes Like |Link to Comment
  • Regulatory Issues Will Put Pressure On Qualcomm In The Short Term [View article]
    I agree completely with the writer's disclaimer that he is not an investment advisor. His understanding of current antitrust issues is at odd with the facts: There is no accusation of anticompetitive business practices either by the European Union or the Korean fair trade commission. They are studying issues, but that's a lot different from pursuing an antitrust action.

    As to possible restructuring changes, including layoffs, that would lead to one-time severance and related costs but might also create an organization with greater revenue per employee, and thus, more market demand for a reduced number of shares. Until such a restructuring takes place, Qualcomm is more like the old RCA Corp., which held the bulk of AM radio and TV essential patents, beginning in the early 1920's and continuing through the 70s. Qualcomm holds the bulk of CDMA related wireless communication patents and many essential 4G patents, ensuring dominance in intellectual property for several years. In addition, its R&D extends to related fields, including wireless battery charging for vehicles and a number of applications relating to machine-to-machine, the Internet of Things, and controls for driverless vehicles.

    Disclosure: Long on QCOM, registered investment advisor for 34 years, owner and publisher of the first computer accessed investment advisory service.
    Jul 21, 2015. 04:53 PM | 2 Likes Like |Link to Comment
  • SanDisk's Earnings Expectation [View article]
    NAND flash memory is sold on world markets, usually in dollars. The yen devaluation means that the cost of production in dollars has declined more than 25% over the last two years. But the price in dollars declined much less over the same period. Thus, profit margins increased greatly until reduced briefly after the loss of sales to Apple led to production at less than full capacity. With products more aligned to customer demand, SanDisk is probably at or near full capacity production, and at the same time has probably reduced its purchases of non-captive production, which entails costs higher than those from its own production.
    Jul 21, 2015. 11:36 AM | Likes Like |Link to Comment
  • Qualcomm: Brace Yourself For An Ugly Quarter [View article]
    "Since Apple only buys baseband modems and not Qualcomm's higher-margin snapdragon processors, the increasing percentage of Apple sales hurts Qualcomm's ASP and margins."

    Utterly and completely wrong! Check the tear down of the latest iPhones, which contain five QCOM chips, including modem, power management, etc. Furthermore, the loss of the processor chip in the flagship Samsung phone is compensated in part by growing sales of Xiaomi, Huawei, and other Chinese phone companies at prices well below what either Samsung or Apple are receiving. The reason these Chinese phones can compete in world markets is that they use combined modem and processor chips in various Snapdragon models, meeting different price points and performance needs at lower cost than competing chipsets.

    The article also seems to ignore the impact on earnings per share derived from some $15 billion share repurchases about 12% of outstanding shares, begun during the preceding quarter and continuing through the end of the current fiscal year. In short, the writer's views are not well thought out and reveal a disturbing lack of research on the pros and cons of coming QCOM earnings.
    Jul 20, 2015. 01:04 PM | 21 Likes Like |Link to Comment
  • SanDisk's Earnings Expectation [View article]
    The writer states, regarding foreign exchange impacts, "The strong US dollar will have a significant effect on their earnings give their strong international presence."

    This view ignores the fact that SanDisk makes the majority of its flash memory chips in factories owned and run jointly with Toshiba, in Japan. The Japanese yen has devalued against the dollar from a level near 78 to the dollar a couple of years ago to its current 124 to the dollar. The devaluation has made chips from Japan competitive with any others made elsewhere, including Korea, China, Singapore, etc. In fact, SanDisk's increasing profit margins since 2013 were tied directly to the yen devaluation. The drop in profit margins in the first quarter was due to a loss in revenue principally from Apple. The strength of the dollar has NO adverse impact.

    As to a drop in consumer business related to the trend toward cloud storage and away from storage on removable chips in cell phones, that is quite true but is caused mainly by phone manufacturers cutting the cost of their phones by minimizing internal, embedded flash memory and instead encouraging customers to use cloud storage. That is not always a desirable alternative, particularly if the customer questions the privacy of cloud storage or the inability to access files wirelessly.
    Jul 20, 2015. 12:44 PM | Likes Like |Link to Comment
  • Nordic Semiconductor: Pioneering Bluetooth Smart Technology For The IoT Revolution [View article]
    Very interesting company. Any idea on their market share, compared with the share taken by competitors?
    Jul 17, 2015. 12:12 PM | 1 Like Like |Link to Comment
  • Corning -2.2% on pre-earnings BofA/Merrill downgrade [View news story]
    Analysts who spout forth anything, whether true or false, to support perhaps a hidden agenda are rarely prosecuted. Pure views about a stock are protected by the first amendment. But publishing views designed to manipulate the price of a stock can be punishable both under federal and some state laws. In New York State, the Martin Act has been used in the past to hinder the most egregious abuses.

    This article looks like a selection of unfounded opinions based on questionable facts or interpretations of the facts. Does the author have another agenda?
    Jul 14, 2015. 10:46 AM | Likes Like |Link to Comment
  • SanDisk How Low Can You Go? [View article]
    "I expect them to suspend share purchases or lower the dividend in order to preserve cash." Hmmm. Interesting statement, especially in light of:

    1. SanDisk is raising its quarterly dividend to $0.35.

    2. The Chinese have made a bid for Micron Technology at a price that makes SanDisk look grossly undervalued. SNDK shares today are up on the news.

    What other evidence do you have of SanDisk "as it enters a rough patch in earnings over the next few quarters?"
    Jul 14, 2015. 10:37 AM | 1 Like Like |Link to Comment
  • Corning -2.2% on pre-earnings BofA/Merrill downgrade [View news story]
    There seems to be a pattern among many large investment firms to downgrade a stock shortly before the coming quarterly earnings report, during a so-called "quiet" period, when the company, by SEC law, does not release any new information. The downgrade clearly causes the share price to fall, enabling some investors, including possibly the original firm doing the downgrade, to create an advantageous entry point for accumulating shares.

    I've seen this kind of shenanigans during more than 33 years of providing professional investment advice to a limited number of clients. Independent investors can profit from these manipulations if they are aware of what's going on, which is quite apparent in this case.
    Jul 13, 2015. 12:30 PM | 4 Likes Like |Link to Comment
  • SanDisk How Low Can You Go? [View article]
    You write, "I would not be surprised to see $200-250m of cash disappear from the balance sheet by the end of the year." Can you determine how much of that cash is for buybacks? If you assume all of the disappearance is because of lower revenues, what's your evidence for that?

    Again, the key factor in this discussion is gross margins on NAND flash production. And from what we know, at least in the public record, SanDisk still gets the best margins. Now what was it you were saying about high costs, inefficiency, etc.?
    Jul 13, 2015. 12:02 PM | 2 Likes Like |Link to Comment
  • SanDisk How Low Can You Go? [View article]
    SanDisk in "complete disarray?" Let's see. They last reported product margins had fallen to 41%, or about double the profit margins on NAND flash reported recently by Micron. SanDisk, it's true, was aiming to dominate the market for SD and microSD cards, inasmuch as SanDisk and Panasonic share patents on those cards. Embedded MMC, which is now becoming more popular, is a much lower margin item, which SanDisk initially could not supply. It was not so much a matter of execution as it was motivation to concentrate on higher margin chips.

    SanDisk worth only about $30? Let's see. Book value is around $25 or higher, with about 75% of that book value per share in cash and marketable securities. So no one would want to pay $50 for a company with that much cash? C'mon, get serious.
    Jul 12, 2015. 08:38 PM | 7 Likes Like |Link to Comment
  • Orphan Drugs Series: Time From ODD To Market Approval [View article]
    There is probably little, if any difference in time for approval of ODD drugs, compared with others. The difference is the allowance of a market monopoly for 7 years, which gives the developer an incentive to produce a drug for a limited target population. As for costs to the patient, insurance companies are becoming more willing to cover the costs, or at least some of them, because these extra expenses allow them to increase their premiums. The major requirement under the Affordable Care Act is that insurance companies must pay out in claims at least 80% of what they receive in premiums.

    Recently ISIS Pharmaceuticals received ODD for a drug (APOCIIIrx) that cuts high cholesterol dramatically in a fairly small target population. The drug apparently helps patients suffering from high cholesterol, who also have diabetes II and are obese. As the drug is already in Phase III testing, I doubt it will take more than 6 months for approval. And like many other ODD drugs, it may eventually be used by a much larger population.
    Jul 10, 2015. 03:17 PM | Likes Like |Link to Comment
  • Avoid SanDisk Despite 52-Week Low [View article]
    Planned option sales by insiders occur whether the stock is going up or down and give no indication of stock price weakness, or strength for that matter.

    The $70 figure is based in estimated revenues and earnings going forward, excluding whatever compensation might be forthcoming from the Hynix litigation.

    If SanDisk is merely "a commodity manufacturing company," as you suggest, how is it that SanDisk continues to receive royalty payments for its intellectual property and continues to have NAND product margins double those of Micron, and probably in excess of those of Samsung?

    Finally, to answer another recent comment suggesting SanDisk is behind Micron and Samsung on 3D, no one has claimed that either Micron or Samsung are currently making profits from 3D sales. The yields are still insufficient. SanDisk knows this and has experienced similarly low yields, which is why it is NOT shipping 3D at this time. That doesn't mean SanDisk is not developing 3D or is behind its competitors. For what it's worth, SanDisk announced it was developing 3D with 48 layers, which is considerably higher than that being sold by Samsung.
    Jul 10, 2015. 02:46 PM | 1 Like Like |Link to Comment