Semiconductors . . . SanDisk and Sony have signed a cross licensing agreement that expands the scope of their memory stick cooperation with a new cross license agreement. Based on the agreement, SanDisk and Sony will further promote Memory Stick throughout the industry respectively. "We are very pleased to have SanDisk manufacture Memory Stick products to help further expansion of Memory Stick's connected world among a variety of compatible products and meet growing market demand," commented Sony's Corporate EVP.
Lattice Semi proposed a $200 million offering of zero coupon convertible notes. The proceeds are expected to be used to redeem $175 million of existing 4 ¾% convertible subordinated notes due 2006. LSCC's 2004 EPS could increase by $0.06 or about 20% on interest savings. However, it is impossible to gauge the L-T dilution impact as the conversion terms were not disclosed. Estimates remain unchanged.
Analog Devices, Texas Instruments, National Semi, Cypress are other companies that have debt outstanding and are candidates for refinancing. CY has already announced plans to refinance debt.
Broadcom and Qualcomm collaborate on Bluetooth solutions for CDMA mobile phones. This collaboration, when finalized, will extend Qualcomm's complete solution, by providing its customers with streamlined, fully tested Bluetooth integration for 3G CDMA wireless devices. As part of the collaboration, Qualcom's Mobile Station Modem baseband solutions, which include fully integrated Bluetooth baseband technology, will be combined with Broadcom's short-range wireless RF products.
Boxmakers . . . Dell's direct model provides an information advantage that is underestimated. Dell is more notable as a user than a creator of information technology. Both its corporate and consumer businesses benefit. In selling to corporate customers, the direct model should apply to the entire supply chain. Much of Dell's business is now "frictionless," where the order goes directly from customer to Dell's build-to-order system. Furthermore, Dell managers and sales reps have more account information than do competitors. Dell hopes to skim off the most profitable business, which isn't reflected in market share statistics based on sales. The company's advantage in consumer PCs appears to be even bigger. Thanks to unique URLs for each ad, Dell can tell quickly which ads are effective. Moreover, it can cut its losses by correcting mistakes fast. Continue to find little to worry about with Dell's fundamentals. Analysts are Neutral on the stock; however, with the P/E over 30X, upside earnings surprises are unlikely given its focus on share gain, management not seeing a demand pickup, and Dell offering less operating leverage than more downtrodden IT Hardware names.
Software . . . Lehman Brothers said it sees Microsoft "due for a rally" for defensive reasons. MSFT has underperformed software stocks since the start of the year, Lehman noted. "The recent rally in the software sector implies that Wall Street believes in a material IT spending pick-up. However, our recent conversations with IT managers would not suggest a material pick-up in spending, leading us to recommend a defensive strategy with Microsoft." The firm believes that EPS estimates for the June quarter and 2004 are conservative, MSFT could be the biggest winner if legal issues have a negative impact on the adoption of Linux, and says valuation remains compelling. Target is $35.
RobBlack.com MarketWrap:
robblack.com |
