Storage . . . Sun Microsystems reported breakeven on $2.79 billion in revenue. In contrast to some other enterprise players, revenues were disappointing (-4% Quarter/Quarter rather than flat). Expect 10%+ sequential lift in 4th quarter. Key to watch: reception for new low end initiatives. Solid financial execution. Despite lower revenues, GM lifted 130 bp Quarter/Quarter and were at highest level since December 2000 (when revenue was at $5 billion); opex cuts one Quarter ahead of schedule. Cash flow strongly positive, taking net cash at quarter end to $4 billion. While most investors remain intrigued with potentially favorable risk-reward for SUNW shares, 3rd quarter results suggest Sun is still losing share. Maintain a market perform rating with a positive bias. According to IDC, servers priced below $100,000 now represent nearly two-thirds of Sun's server revenue versus 48% one year ago and 98% of total shipments versus 95% one year ago. Why?...dramatic improvements in microprocessor, SMP, I/O, operating system and compiler technologies have rendered so-called "low-end" systems sufficient for an increasing percentage of customers' workloads. Sun itself refers to the "low-end" V480 and V880 systems as server consolidation platforms, suggesting that these systems are now powerful enough to consolidate workloads running on multiple similarly configured systems of several years ago. Management continues to revere R&D as the lifeblood of the company. Sales of X86-based servers are likely to cannibalize sales of servers based on Sun's own Sparc architecture over time, rendering a portion of the company's current R&D investments unproductive. This will likely require further restructuring actions and headcount reductions in future quarters. (We note that the last time Sun had similar revenue levels, the company's total headcount was 20-25% lower. Other R&D investments (N1, SunONE, storage, etc.) may ultimately prove productive, but sales of the resulting products will depend largely on Sun's ability to remain competitive in servers. SUNW losing share to IBM, Dell, and Hewlett Packard.
Network Equipment . . . Redback Networks 1st quarter was ($0.13), in line, on revenue of $29.5 million (+7% Quarter/Quarter), above $27.2 million estaimes. Most if not all the growth was driven by the SMS business. Added 7 new smartEdge customers, but revenue was flat to slightly down, disappointing. Cash burn continues. Market dominance by Cisco, Juniper has created a lofty challenge for RBAK to crack the edge router market, limiting its addressable market. & growth opportunity.
Semiconductor Equipment . . . Lam Research (tools that factories use to etch and clean computer chips) said it earned 3 cents a share in the quarter ended March 30, excluding certain costs. On that basis, it was expected to break even.
Cree Inc reported third-quarter earnings of $10.6 million, or 14 cents per share, in line with the average estimate. Revenue rose 80 percent in the latest three months to $60.2 million from $33.4 million in the same period a year earlier.
Ultratech Stepper reported 1st quarter loss of $0.04 per share which was $0.01 better than the consensus of ($0.05). Revenues rose 11.2% year/year to $22.0 million versus the $21.5 million consensus.
UBS says that CREE indirectly acknowledged many of the concerns firm has been raising in recent quarters. CREE is sampling new Xbright product that alleviates shortcomings in previous versions, as UBS had reported. The company is also reviewing legal options to protect its intellectual property that is being threatened by Taiwanese and other new entrants. Historic precedents lead firm to be skeptical regarding the ability of litigation to halt competitive encroachment.
Semiconductors . . . Broadcom's sales surged 37 percent and first-quarter loss narrowed to 25 cents a share from a loss of 63 cents in the year-earlier period. Profit, excluding certain costs, would have been 6 cents a share, beating the 2 cents expected by analysts. March revenue of $327.5 million (+10.7% Quarter/Quarter) versus guidance of 3-5% Quarter/Quarter and consensus of $308.3 (+4.2% Quarter/Quarter). Growth drivers were cable modems and the emerging businesses (25% of revenue, up from 19% in 4th quarter), specifically WLAN, mobile handsets and DSL, as well as an increase in the ServerWorks business unit from the depressed level of 4th quarter. Pro Forma EPS of $0.06 came in ahead of consensus estimates of $0.02. Gross margin of 50.1% was essentially flat Quarter/Quarter. Guided for revenue growth of 12-14% Quarter/Quarter (approximately $370 million) versus consensus of approximately $322 million.
Legg Mason upgraded Broadcom to Buy from Hold following stronger than expected earnings. The firm believes the magnitude of the company's outperformance will likely allow its shares to return to the upper half, if not the high-end, of its recent range; rev strength was seen across all divisions, and firm believes the naming of a strong CEO with a solid industry reputation should be a significant catalyst. Target is $24, which is derived by adjusting BRCM's 2004 price-to-sales ratio of 2.6x to that of its current peer group average of 4.4x.
Cypress Semi reported a loss of $0.10 per share, excluding acquisition-related, restructuring and other charges of $0.17, in line with the consensus of ($0.10). Revenues fell 6.3% year/year to $181.0 million versus the $177.8 million consensus. Looking ahead, the company forecast sequential revenue growth and a return to pro forma profitability in the second quarter. Seven analysts are looking for a loss of 4 cents per share in the period, on average.
UBS Warburg analyst Alex Gauna upgraded Applied Micro Circuits (communications-chip maker) to ``buy'' from ``neutral.'' He said the shares should reach $5 within 12 months.
Advanced Micro Devices (Intel's biggest rival in personal-computer processors) said its first-quarter net loss widened to $146.4 million as sales dropped 21 percent. Advanced Micro, which has had losses for seven straight quarters, gave up market share to Intel in 2002 and hasn't managed to gain back much ground, analysts said.
Deutsche Securities reiterates their Sell rating on Advanced Micro Devices. The stock has risen 55% over the past 2 months. The firm believes the rising threat of a liquidity crunch should dampen investors' near-term enthusiasm; while improving Hammer newsflow may prevent the worst case trough price/book scenario ($2 share price) from occurring, a decline to their $5 price target is realistic given increased balance sheet concerns.
UBS Warburg upgraded Agere Systems to Buy from Neutral, saying checks indicate improving prospects for the company's metro area networking and GPRS-related product lines in 2003 and beyond. The firm also believes the risks associated with negative wireless LAN indications, including Proxim results, are now adequately reflected in current valuation levels. Target is $2.50.
Applied Micro was upped to Buy from Neutral at UBS based on checks that suggest AMCC is complementing its core strengths in optical core ICs with new product opportunities in the metro market and other performance intensive semiconductor markets. Trading at approx. 1x cash, firm sees only modest downside risk to investors to taking positions in shares of AMCC before the earnings power of these emerging opportunities become clear. Also notes that AMCC holds more than $1 billion in cash (approx $3.45/share). Target goes to $5 from $4 based on improved assumptions for company's intermediate growth prospects.
SanDisk (world's largest maker of flash-memory data-storage products) returned to profitability in the first quarter as sales surged 88 percent. The company earned 35 cents a share, exceeding analysts' expectations for 18 cents a share. Flash-memory devices are used in electronics ranging from digital cameras to mobile phones. SanDisk reported earnings of $24.9 million which was up from its year-ago loss of $3.7 million, or 5 cents per share. The latest results exclude pre-tax unrealized losses of $6.7 million related to re-valuation of the company's equity investments in Divio and Tower Semiconductor. Revenue leapt in the latest three months to $174.5 million from $92.6 million in the same period a year earlier. Looking ahead, SanDisk expects a flat sequential revenue performance in the second quarter.
Skyworks Solutions (maker of chips for cellular phones) lost 80 cents to $5.46. The company said revenue from its wireless business may fall by as much as 5 percent in the current quarter from the previous period. Revenue rose 22 percent in the latest three months to $157.4 million from $128.5 million in the same period a year earlier. But the company said it expects revenue to be flat or down five percent on a sequential basis in the third quarter.
Anadigics reported a first-quarter loss of $12.2 million, or 40 cents per share, including a charge of $600,000, or 2 cents per share, related to a workforce reduction. Excluding this item, the maker of radio frequency chips lost 38 cents per share, 9 cents wider than the average. Sales slipped in the latest three months to $16.1 million from $18.7 million in the same period a year earlier.
Silicon Image reported first-quarter pro forma earnings of $500,000, or a penny per share, in line with Wall Street's consensus estimate. Revenue (provider of high-bandwidth chip systems) rose 3.7 percent to $24.7 million in the quarter from $23.8 million in the same period a year earlier. Looking ahead, the company said bookings were strong and it has visibility of 50 percent entering the second quarter
Boxmakers . . . Apple reported $0.04 on $1.475 billion, in line but not the issue. AAPL’s N-T operating picture looks roughly flat with stable consumer trends and Powerbook momentum offset by weak education and creative sector demand. Fine tuning estimates from $0.13 to $0.15 for 2003, 2004 from $0.25 to $0.20. Management mum on strategic direction. There remains uncertainty on AAPL’s intentions. Normally, analysts could consider taking a stab at the AAPL shares given the much narrowed premium over the notional net cash buffer of $11.60+/share.
Planar Systems (flat-panel display) reported first-quarter earnings of $3.6 million, or 25 cents per share, meeting Wall Street's consensus estimate. Sales rose in the latest three months to $60.1 million from $48.9 million in the same period a year earlier. The company attributed the sales growth to strong desktop monitor sales and new business for Planar-branded large-format plasma displays. Looking ahead, Planar forecast earnings of $1 per share on sales of roughly $230 million in fiscal 2003, a nickel ahead of the current average estimate.
2020insight.com
Thanks for posting all the information Stan. Gottfried thank you for getting the btb data and charting done!
RtS |
