Seeking Alpha: Atmel Still Needs To Execute Better

Atmel (NASDAQ:ATML) still looks to me like a "couda, wouda, shouda" story. There are a lot of good and/or attractive things about this company - its leadership in MCU, its potential in the Internet of Things (or IoT) market, its margin self-improvement potential. Unfortunately, there are also legacy issues like strategic/execution missteps (xSense, for one), past failures to identify/execute good deals, disappointments relative to prior margin improvement goals, and ample competition.

I'm not sure why I want to like Atmel (maybe it's because Atmel was one of the first stocks I ever bought), but I still do. Certainly the NXP Semiconductors (NASDAQ:NXPI)-Freescale (NYSE:FSL) deal and the relative scarcity of good MCU assets helps the valuation proposition, but Atmel doesn't jump out to me as an obviously cheap opportunity. There is definitely self-improvement potential here (and the possibility for better revenue/margins to drive a higher value), but Atmel has frustrated investors with its unrealized potential in the past and I'm not sure management has earned the benefit of the doubt it takes to be really excited about the shares at this level.

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Atmel Still Needs To Execute Better

Seeking Alpha: Cavium Networks - Beat, Raise, Repeat

In a quarter that has turned sour for many semiconductor investors, Cavium (NASDAQ:CAVM) has come through again with a solid beat-and-raise performance. Cavium is still a small company with a pretty concentrated business, but the opportunity for purpose-built solutions for enterprise, data center, cloud, and broadband markets that also offer good cost and power tradeoffs is an attractive one. I don't really expect Cavium to stay out on its own for the long term, but I think the standalone valuation is still pretty appealing.



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Cavium Networks - Beat, Raise, Repeat

Seeking Alpha: Can More Be Squeezed From Microchip Technology In This Cycle?

I'll state off the top that I like Microchip Technology (MCHP) as a company. The company has established itself as a top five player in microcontrollers (or MCUs) and is poised to benefit from the growing Internet of Things (or IoT) opportunity, as the company offers strong complementary technologies in MCUs, analog, and connectivity. The downside is valuation, where I just don't see as much upside potential and would prefer Atmel (ATML) on a head-to-head basis.

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Can More Be Squeezed From Microchip Technology In This Cycle?

Seeking Alpha: Atmel Now An Execution Story

Opportunity is not the problem for Atmel (ATML). There are multiple growth avenues for the company's large microcontroller business, not the least of which is the Internet of Things (or IoT) opportunity. There is also still an opportunity for Atmel to make good on the potential of XSense, participate in auto market growth, and continue to wring cash from its memory business.

The problem is execution. The company's touch business, and XSense in particular, haven't developed as hoped and the company has more of a recent history of promising rather than delivering. The potential is there to take this stock to $10 (or higher), and management compensation appears aligned with investor interests, but Wall Street seems to be sliding into a "show me" skepticism with this company and this stock.

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Atmel Now An Execution Story

Seeking Alpha: Silicon Labs Still Looking For A Transition To Drive New Growth

There's virtually no such thing as a perpetual winner in the semiconductor space, as companies have to deal with cyclical end-markets and evolving competition. Silicon Labs (SLAB) is more proactive than most companies in "self-obsoleting" and identifying new revenue growth opportunities, but the company's transition toward the microcontroller-driven Internet of Things business is still in progress. I'm not sold on the company's ability to carve out a leading position in ultra low-power microcontrollers, but Silicon Labs does have a shot of being one of the better growth stories over the next 18 months, and forward expectations aren't too demanding.

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Silicon Labs Still Looking For A Transition To Drive New Growth

Seeking Alpha: Cavium Still Trying To Prove It Is More Than A Niche Specialist

Analysts and investors seem to be of two minds when it comes to companies with specialized or "niche" products. On one hand, these companies often have good market shares and strong margins, but at the cost of a smaller addressable market and the risk of competition from larger, generalist rivals. When it comes to Cavium (CAVM), there is still active debate as to whether the company's efforts to enlarge and expand beyond its specialized multi-core network processor market will pan out.

I guess I would call myself a cautious bull on Cavium. There is a large pool of potential revenue out there if Cavium can succeed in lower core-count markets and if new efforts like Neuron, Fusion, and Project Thunder gain share. It is not going to be easy, though, as few companies achieve long-term revenue growth in excess of 20% and Cavium will have to do so in the face of competition from Intel (INTC), Freescale (FSL), Broadcom (BRCM) and Qualcomm (QCOM). This is by no means a widows-and-orphans stock, but for readers looking for high-fliers, this is a name worth further due diligence.

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Cavium Still Trying To Prove It Is More Than A Niche Specialist

Seeking Alpha: Atmel Looks To Maintain Its Momentum Post-CES

Microcontroller and touch specialist Atmel (ATML) had a bumpy 2013, but rode a solid wave of enthusiasm into the recent Consumer Electronics Show that has the stock up more than 10% year-to-date. I see some solid reasons to be optimistic about the company's efforts in touch, as well as its underappreciated MCU business. The pace and magnitude of gross margin improvements are significant unknowns, though, and there is ample competition in the touch space.

Atmel is not the cheapest chip stock out there, but progress with touch control and sensor attach rates will likely be well-rewarded by the market. Double-digit free cash flow growth can support a fair value in the $9.50 to $10 range, and although I can't make as strong of a valuation-based call here as I might like, I think the set up for 2014 is attractive.

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Atmel Looks To Maintain Its Momentum Post-CES

Seeking Alpha: Silicon Labs Waiting To Catch The Next Wave

"Innovate or die" is a pretty good mantra for most of the chip industry, and it's certainly true for Silicon Labs (SLAB). This diversified chipmaker's stock has spent most of the last four years oscillating between $30 and $50 as products like PC modems and FM tuners that once drove a large part of the company's growth have become commoditized or integrated into other products.

Now the question seems to be when (and perhaps "if") the company can latch on to the next big thing. At this point, Silicon Labs appears to be in good position to leverage the growth of the "internet of things", and could be positioning itself to be a much stronger player in lower-power microcontrollers and CMOS-based MEMS oscillators for timing applications. While the shares are, perhaps, undervalued on the basis of the PEG-based approaches that sell-side analysts favor, it takes a little more bullishness to get there with discounted cash flow.

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Silicon Labs Waiting To Catch The Next Wave

Seeking Alpha: Cavium Is Great, But So Are The Expectations

The annoying thing about watchlists and "waiting for pullbacks" is that you have to be ready and willing to pull the trigger when they do happen. More often than not, whenever a growth stock pulls back significantly and actually looks like it sports a reasonable valuation, there are numerous analysts out in print harping on whatever bad news drove the stock down in the first place.

That brings me to Cavium (CAVM), a very interesting specialty networking processor company. The market gave investors two cracks at this stock below $25 in just the last six months, and while I would not dismiss or ignore competition from Intel (INTC), Broadcom (BRCM), Freescale (FSL) and others, I believe Cavium is well-positioned to deliver some rather remarkable growth in the coming decade. The only problem is that most of the Street things so too now, and even robust growth expectations barely drive a fair value above today's price.

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Cavium Is Great, But So Are The Expectations

Investopedia: Texas Instruments Just Out Of The Starting Blocks

I'm not going to say that every part of the semiconductor space is back on track, but the earnings and guidance that coming suggests that things are getting better outside of consumer electronics and PCs. That's good news for Texas Instruments (NYSE:TXN), particularly as the company is seeing stronger conditions in industrial and auto markets and better margins in the wake of moving on from wireless. Although the stock does not look cheap on a cash flow basis, I do believe the company's margin leverage, and subsequent improvements in ROE, are likely to send the shares higher over the next 12 to 24 months.

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http://www.investopedia.com/stock-analysis/072313/texas-instruments-just-out-starting-blocks-txn-adi-lltc-nxpi.aspx

Investopedia: The Bar Is Rising For Atmel Again

Unless your name is Qualcomm (Nasdaq:QCOM), serving the wireless device market is a tricky proposition, as constant ASP erosion is a fact of life and the prospect of losing sockets always looms. Investors in Atmel (Nasdaq:ATML) have seen that firsthand, as this large microcontroller company has suffered from competitive socket losses and market shifts toward cheaper alternatives. With new product opportunities on the way and the prospect of improving operating leverage, though, these shares have started to recover. The question for investors is whether the company can deliver even more upside than these improving expectations incorporate.

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http://www.investopedia.com/stock-analysis/061013/bar-rising-atmel-again-atml-syna-fsl-msft.aspx

Investopedia: Broadcom Stumbles, But The Street Forgives

The next time Wall Street is fair will be the first time, but I imagine investors in some of the beaten-up tech stocks are looking at Broadcom (Nasdaq:BRCM) with a little envy or resentment. Although Broadcom's guidance for the next quarter was pretty soft, as the Street basically shrugged it off and gave the company/stock a pass. Broadcom enjoys tremendous support among sell-side analysts, but the company still looks like an appealing play on growth in the mobile/wireless, networking and home connectivity markets.

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http://www.investopedia.com/stock-analysis/2013/Broadcom-Stumbles-But-The-Street-Forgives-BRCM-QCOM-AAPL-FSL0205.aspx

Seeking Alpha: Challenges Abound, But Overlooked Microsemi Should Be Ready To Deliver

Small-cap chip company Microsemi (MSCC) gets a lot of flak for what it is (highly exposed to defense) and what it isn't (a fast-growing mobile device story), but the fact remains that this company has grown revenue at a 20% compounded average rate over the past decade. What's more, the company is offering a rare combo - a good legacy business where competition faces an uphill battle, coupled with organic growth opportunities in growth markets and positive margin leverage.

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Challenges Abound, But Overlooked Microsemi Should Be Ready To Deliver

Investopdia: After A Reality Check, Cavium Looks Interesting Again

Any investor who wants to take a value approach toward tech stocks had best have some patience. While some quality stocks do give investors a chance to pick up shares at a reasonable chance, others only get affordable once the growth opportunities have largely gone away.

It seems unlikely that Cavium's (Nasdaq:CAVM) growth potential has left the building. Instead, this semiconductor company has seen the shares sell off sharply on a broad-based slowdown in its core enterprise and service provider markets. With relatively few technology peers and sizable addressable markets, this could simply be a lull in a long-term growth story.

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http://stocks.investopedia.com/stock-analysis/2012/After-A-Reality-Check-Cavium-Looks-Interesting-Again-CAVM-CSCO-FFIV-FSL0530.aspx

Seeking Alpha: Microsemi's Frustrating But Ultimately Undervalued Story

Small-cap semiconductor company Microsemi (MSCC) and I go back a ways. I've owned this stock at various points over the last 16 years and have always managed to make money doing so. I suspect a fair bit of those profits have come from appreciating the company's qualities and prospects at times when the Street was entranced by sexier growth names and then selling as the optimism built.

It's a little hard to really feel good about the December results that Microsemi just posted. Sure, there are good reasons that results were just in-line and that guidance was a little soft, but I hold these shares for performance and not to hear good reasons for underperformance. So, what's a Microsemi investor to do?

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Microsemi's Frustrating But Ultimately Undervalued Story

Investopedia: Linear Breaks Formation

It looks like the third week of January is when a little good news came back into the semiconductor world. Though Altera (Nasdaq:ALTR) and Texas Instruments (NYSE:TXN) previously suggested the worst was about to be over, ironically while lowering guidance for the fourth calendar quarter, equipment vendor ASML (Nasdaq:ASML) and analog chip company Linear Technology (Nasdaq:LLTC) gave outright encouraging news with their respective quarterly reports.

Results Still Not Exactly Pretty  
To be sure, enthusiasm about the Linear story is about what's going to happen and not about what did happen. Results in the company's fiscal second quarter weren't that great, as revenue dropped 11% on a sequential basis and 23% on a year-on-year comparison. The revenue shortfall was largely just a byproduct of ongoing industry de-stocking throughout industrial, communications, auto and other markets.


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Investopedia: Cavium Should Be Bottoming Out

Networking chip specialist Cavium (Nasdaq:CAVM) may have started the year as one of the few growing semiconductor stocks, but eventually the tough chip market sucked this name into the whirlpool as well. Although many growth investors have bailed out on fears that rivals will gain shares, more patient, aggressive investors may want to consider this as a rebound name for 2012.

A Tough Third Quarter 

It doesn't matter that Cavium's year-on-year numbers were decent, as few chip investors pay any attention to that frame of reference. So while revenue did indeed rise almost 23% from last year, the fact that it dropped a little over 5%, sequentially, is the more relevant figure.

The full Investopedia article is here:
http://stocks.investopedia.com/stock-analysis/2011/Cavium-Should-Be-Bottoming-Out-CAVM-CSCO-IBM-FFIV-EMC-JNPR-BRCM-QCOM-FSL1101.aspx

Investopedia: Broadcom Assigns A Lot Of Value To Expansion

The market may not be willing to value semiconductor stocks at the same rate as just a year ago, but industry insiders have no such problem. Broadcom (Nasdaq:BRCM) announced a deal for high-performance processor company NetLogic (Nasdaq: NETL) on Monday that gives the selling shareholders a premium valuation that accounts for a lot of the growth potential of the company.


Broadcom's Deal
Broadcom announced that it will pay $50 a share, or $3.7 billion in total net cash, for the shares of NetLogic. That is a 57% premium to the Friday closing price of NetLogic, as well as a price that exceeds NetLogic's all-time high and roughly matches the high watermarks for price-sales valuation.

NetLogic has generated a little more than $400 million in revenue over the past year, with a trailing growth rate in the high single digits. That may not sound so impressive, but that has been accomplished in an environment where end-use customers like Cisco (Nasdaq:CSCO), Juniper (Nasdaq:JNPR), and Alcatel-Lucent (NYSE:ALU) have seeing some pretty tough markets. While the three to five year growth rate estimates provided by sell-side analysts are near worthless, the fact remains that the sell-side community expects NetLogic to grow at a high-teens clip for several years (and the valuation suggests similar, or greater, expectations from the buy side).




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Satellite Phones Head Into Orbit

Considering all the attention given to iPhones, Blackberries, 4G and other mobile phone topics, investors could be forgiven if they have forgotten that satellite phone systems still existed. Judging by the announcement last week that Iridium Communications (Nasdaq:IRDM) had awarded a major contract to build a new satellite network, the business not only still exists, but has money-making potential ahead of it. 

The New Deal 
On June 2, the satellite phone operator announced that it had awarded a contract for its Iridium NEXT project to a consortium led by France's Thales. The deal, which could be worth in excess of $3 billion, calls for the construction and launch of 72 low-orbit satellites starting in 2015. 


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