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Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (2656)	2/12/2007 10:38:09 AM
From: Elroy	Read Replies (2) \| Respond to of 20435

thier balance sheet is strong enough to weather any such downturn and the future is all about digital image sensors. It is going to be an amazing growth story, just like the ubiquitous PC. They don't even need to dominate the market, just participate. However, WFC gives them a strong edge... PS declining ASP is the major factor in the growth trend of all commoditized electronics. You must look deeper than that, IMO. Yeah, nobody said they are going to go bankrupt, but I think the idea is not that their will be a downturn followed by an upswing - rather, gross margins will perpetually turn down and unit growth won't be enough to offset that. It started in 2006, their units grew something like 20% sequentially and revenues were flat. Although price declines are characteristics of consumer electronics, I don't think there has ever been a fabless commodity semi company that has done well over the long term. All the other commodity semi companies (MU, SNDK, Samsung, etc.) all have their own fabs. I don't know that the bear story is correct or not, just that's the story. I think the stock will follow the direction of gross margins. GM up, stock goes up, GM down, look out below. That's why the Wave Front Coding is good news - it should boost GMs if it gets some customer acceptance.