I just don't see that much 'value' plays out there for hi-tech, especially for chips which I am familiar with.
LSI last fall was a no-brainer steal - underlying business fundamentally sound, building/has money to build next generation fab, seems to have made a nice acquisition, taking steps to slim-down for the next fight, all the right moves and yet the market took it brutally down.
I look at:
NSM - is their SOC going to succeed? Are they going to bring out the chips? How can one bet one way or the other.
RDRT - (did buy some myself), totally dependent on whether they can bring out GMR in time. How can one bet?
SGI - to me looks a little bit better, tons of cash, good technology, question is can they establish themselves in the NT workstation market.
Smaller equipment guys, to me upside limited.
CY, IDTI - no IP, no story line, they are just along for the general ride. IDTI need to get rid of Winchip and have ClearLogic start making some money.
To people like Dipy that thinks analysts are just pumping stocks before they get out, take another good look, the 'recommended' companies usually have a 'story' behind it, like INTC, ORCL, MSFT, TI, ADI, XLNX, ALTR STM etc. etc. And in general they do deliver. And I think the semis should deliver this round too in another 6 months of so when they 'start minting money', like TJ puts it.
Thus I look for the big stocks once again to lead in the next round. And the next round should start once the earnings pick-up are in evidence. Sales have already started to go up, earnings pick-up should follow by Q4 if not Q3. Baring good size summer slow-down, Q2 earnings and forward looking should show that. And the rise should take place starting July. If there is a good size summer slow down (with Asia powering back up e.g. China is second largest PC market now, having overtaken Japan, and Chinese don't take 4 weeks off for summer, that slow-down may not be that drastic), then we should see that on Q3 earnings in Oct.
Bet on summer slow down, get out of techs now and get back in in late summer. Bet on minimum slow down, just sit tight. Me, I'm opting for the latter - not to mention I don't see too many good places to put money in the next 3 months.
If LSI strikes out from here, they should do no worse than the non-IP guys over the next 2-3 years of upturn. That may mean a double when the euphorism takes hold and even CY and IDTI goes up too. If they strike a home run, I agree that it does have a chance of a triple or even more e.g. if G12 0.18um turns out to be a barn-burner of s success, together with CDMA (assuming networking, storage & consumers continuing to do their usual good). Now that will make me a very happy man!
patrick |
