Slacker, the tape agrees with your assessment that few have faith in 2001 earnings for the semi's, but isn't that more of the typical herd mentality reaction? The industry has become too fragmented to paint it with a single brush...except, apparently, for Wall Streeters.
Unless business has come to a screetching halt in the last six weeks across ADI's myriad product categories and geographies (and, no, I don't believe any one customer accounts for more anywhere near 10% of ADI's revenue), then I remain bullish. Rememeber, it was a mere six weeks ago, Friday, Sept. 22, that Jerry Fishman hit the media circuit (CNBC and FOX) and gave the all-clear signal in the wake of Intel's earnings announcement and spoke positively about 2001.
That said, I realize things do change. BBY is warning about a slowdown for xmas this morning (not flat or a loss, but a few % points lower than plan). I'll wager hot products like DVD's (where ADI plays) will still fly off the shelf.
What about ADI's big markets? Circumstantially, TI predicted very solid growth for DSP's and analog products for 2001 in it's CC last month. Their problem is over-exposure to the cell phone market which is working through inventories now.
And with 5% of it's revenue in handsets, ADI's exposure is marginal, at best.
Even if we do see a somewhat softer market next year for ADSL (dsl and cable modems), Central Office buildouts, high-speed switching, various consumer products, and the vast array of OEM product business, just to name a few, I think it's safe to say that ADI will still grow at a healthy clip over this years' astounding rate. And there's new products and initiatives to consider in the revenue mix for 2001; Othello, optical, and the Intel collaboration, for instance.
Maybe I'm simply in denial, but I see a "shoot first, ask later" scenario playing out here. What's frustrating is that ADI's getting whacked as if it were trading with a GSPN- AMCC-PMCS triple digit earnings multiple, when, in fact it was already trading at a fraction of those high flyers before the carnage. This beating is undeserved and overdone, IMO.
Everything gets settled on the earnings call, next Tuesday.
BV |
