<..I worked at Bell Labs and retired just as it became Lucent. I just don't understand the technology yet...>
Seems like half this thread has worked in the industry. What great resources.
<..Through limit on size of the atom the chip design has reached its limit for now...>
As the previous articles indicate, once size limits are reached, efficiency of design will rule.
<..It looks to me like TI has pretty good competition...>
Also keep an eye on ADI's very competitive single chip solution:
analog.com
analog.com
analog.com
And 3Com using this chip for THEIR ADSL:
biz.yahoo.com
<..The question of manufacturing reproducibility comes in two years...>
I would be surprised if LU's manufacturing wasn't top quality. MANY
big name technology companies outsource their components. Did you see Savitz's Barrons last week?:
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Plugged In: Finding Bargain Stocks Behind Famous Nameplates
By Eric J. Savitz
Things aren't always what they seem. Say, for instance, you were to buy some computing gear from Cisco Systems, Hewlett-Packard or Sun Microsystems. You'd likely assume, if you even stopped to think about it, that the hardware you'd bought had been manufactured by the company that put its nameplate on the front. As it turns out, however, there's a pretty good chance you would be wrong. And the same goes for products from companies like Apple Computer, IBM, Lucent Technologies, 3Com, Bay Networks, Silicon Graphics, AT&T and Ericsson. To one degree or another, they've been farming out manufacturing of key products to outsiders, Barron's reports.
In short, business is booming for the oft-ignored, unglamorous technology sector called contract electronics manufacturing. Frost & Sullivan, a Mountain View, California-based research firm, earlier this month forecast 26.1% compound growth for the contract manufacturers stretching out to 2004. By the end of that span, they project, the industry will have revenues of $110 billion. Want more evidence? Consider the recent performance of Solectron, of Milpitas, California, one of the largest players in this fragmented field. In its fiscal first quarter, ended November 28, Solectron reported a 41% increase in sales, to $1.1 billion, as per-share earnings improved to 38 cents, from 29 cents. Though estimates were a tad higher, the stock had sold off ahead of time, and it actually rebounded nicely on the news. Investors, in particular, were encouraged by Solectron's observation that its results had not been affected by the Asian currency crisis..........
........."The business outlook for these companies has been getting better and better, particularly in Europe," Blanton enthuses. "These companies are now doing all kinds of activities beyond circuit-board assembly, which is where the industry started. Some of them are full-service facilities, providing design and engineering services, packaging consulting, test development, prototyping, procurement, board assembly, software duplication, order fulfillment. You can start a tech company now and not do any manufacturing."
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<..I just used the Battalaglla recommedation to sell half my position. Still own alot of TI though. Not to give up...>
As I said in my post with Battapaglia's earnings/price target, I think he is too optimistic. We will know more in a couple of weaks.
Remember TXN traded down from it's high after Q3 as a result of lower than whispered revenues, even though earnings beat formal estimates by .06.
And the Asian concerns were publicized back in Oct:
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Chip Cos Could Face Problems Funding New Factories In Asia
By Christopher Grimes
NEW YORK (Dow Jones)--Semiconductor companies with operations in Southeast Asia have a couple of reasons to worry as pressures on the Hong Kong dollar mount.
The ongoing currency crises in Malaysia and Thailand, which are rattling the market in Hong Kong, could affect the ability of chip companies to build the billion-dollar factories they depend on to stay competitive.
Further, a prolonged economic downturn in the region could dry up the appetite for cellular phones, computers and other chip-driven devices.
Several fund managers termed the chip-equipment industry as particularly susceptible to further weakness in the region. Indeed, chip companies were hit hard Thursday, although it's hard to say if they were hit much harder than the broader technology sector.
The Dow Jones index of eight semiconductor stocks declined 2.5% Thursday on a market-capitalization weighted basis. The technology-heavy Nasdaq Composite was off 31.7 at 1676.31.
"Currency fluctuations bring into question not only the ability to build new factories, but also the demand for the end products," said Hambrecht & Quist Inc. analyst Gus Richard. "That's what's freaking people out."
When interest and currency rates are favorable in the region, governments and investors don't mind putting money into chip factories that aren't likely to turn a profit immediately. Because the capital-intensive chip business requires frequent - and sometimes radical - conversions in factories, this type of spending is required to keep up with the competition.
"Interest rates are rising, equities are going down, so the cost of getting money through capital spending is going up," Richard said. "Most of the contracts are done in dollars, but they still have to convert into dollars from the local currencies. It makes the whole proposal of building a factory more expensive."
A prolonged downturn in the region's economic health could have "very broad impacts" on the chip companies, said PaineWebber Inc. analyst Kenneth Pearlman.
However, some chip companies with operations in the region say that currency problems haven't hurt them.
So far, there has been "no apparent impact" from currency issues, said Jim Chiafery, director of investor relations at Kulicke & Soffa Industries Inc. (KLIC), which counts 80% of its customers in Asia. "We price our equipment in dollars everywhere except Japan."
Texas Instruments Inc. (TXN), which fell 3.3% in trading Thursday, has operations in Malaysia, Singapore, Taiwan and Japan. Spokeswoman Kim Quirk said the company is going to "ride it out," adding that officials there think the situation is largely temporary.
"We see that part of the world going through a period of turbulence (which) may even be a byproduct of fast growth," Quirk said. She added that currency hasn't had a significant impact on the company so far.
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Steve |
