Seeking Alpha: Avago Definitely Getting Some Benefit Of The Doubt

A little more than a year ago, I wrote about Avago Technologies (AVGO) and liked the prospects for the stock based both on its strong position in FBAR filters (an important component for handsets) and its under-appreciated positions in areas like fiber optic transceivers, SerDes ASICs, industrial fiber optics, and motion encoders for markets like networking, automation, and so on. In the 14 months since that piece, the shares have risen more than 110%.

I'm not quite as bullish on Avago now, though. I have a positive opinion of the LSI acquisition on balance, but I feel like sentiment has improved at a much greater rate than the long-term business prospects. While I do think Avago can exceed its own targets for reaping benefits from the LSI deal, it would appear that management pretty much has to if the stock is going to remain strong. I do like the newly-diversified Avago's business mix a little more and I think the company can do big things in both wireless and networking, but I think it takes some pretty ambitious assumptions to drive a significantly higher value estimate.

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Avago Definitely Getting Some Benefit Of The Doubt

Seeking Alpha: Should Investors Buy PMC-Sierra Ahead Of Big Product Ramps?

Shares of storage and networking semiconductor company PMC-Sierra (PMCS) have done reasonably well since I last wrote about the company in October. Up around 20%, the company has lagged acquisition-assisted LSI (LSI), but matched Broadcom (BRCM) and outperformed Applied Micro (AMCC). Analysts, though, are a little worse than lukewarm on the shares, with four holds and two underperforms at present.

In reading the sell-side research, it seems like analysts are concerned about going positive on PMC-Sierra ahead of meaningful ramps in PCIe flash controllers, 12G SAS, and OTN. While I find it odd that the normally overly-bullish sell-side is being cautious, investors don't seem to have the same issue. With the run in the shares over the past six months, PMC-Sierra's price seems more than fair relative to its long-term cash flow-based value and likewise quite reasonable relative to operating margins.

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Should Investors Buy PMC-Sierra Ahead Of Big Product Ramps?

Seeking Alpha: Marvell Shares May Not Be Done Yet

The last few months have been kind to many chip stocks, with Maxim (MXIM), Marvell (MRVL), and Nvidia (NVDA) all logging double-digit returns. Marvell's run actually goes quite a bit further back, as the shares have more than doubled from their late 2012 lows. As Marvell has grown share in the hard drive controller space and announced LTE wins in China, investors have returned to the shares despite worries about a looming patent infringement award and the prospects of competing with Qualcomm (QCOM).

The sell-side seems to be getting more cautious about suppliers to the high-end smartphone market, but that's not really Marvell's core market. Although I own and prefer Broadcom (BRCM), Marvell may be undervalued enough to be worth a closer look even after this long run. Most chip stocks are bought to be sold, though, so investors shouldn't assume that this is a buy-and-forget opportunity.

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Marvell Shares May Not Be Done Yet

Seeking Alpha: Is PMC Sierra The Way To Play Storage And Carrier Spending?

On the surface at least, PMC-Sierra (PMCS) is in some of the right markets. Enterprise storage continues to score well in various CIO surveys of spending priorities, while carriers are stepping up their plans for metro/access network spending and wireless backhaul. Not only are the end-markets looking better in many cases, but PMC-Sierra also enjoys good share and growth prospects from WinPath and 6G/12G transitions.

It takes more than a good top-level story to drive a good stock performance, though, and I'm not completely sold on the value proposition for PMC-Sierra. I do believe storage and carrier spending will accelerate, and the possibility certainly remains that the company can outperform current expectations for 2014 and beyond. While these shares could move as much as 20% if PMC-Sierra's 2014 outlook doesn't worsen and the Street goes back to historical multiples for the company's comp group, the core DCF valuation doesn't suggest quite as much upside.

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Is PMC Sierra The Way To Play Storage And Carrier Spending?

Investopedia: Marvell - Unicorn Of The Chip Space?

Reading sell-side research on Marvell (Nasdaq:MRVL), you might come away not thinking too highly of the company or its decisions to grow the business in areas like Chinese mobile and wireless. On the other hand, look at the company's actual market share gains, financial performance, and the market's opinion on the company and you come away with a much different opinion. So far, the bulls in that argument are winning the day, as Marvell has been outperforming names like Qualcomm (Nasdaq:QCOM), Broadcom (Nasdaq:BRCM), and Nvidia (Nasdaq:NVDA).

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Investopedia: Fusion-io Tries To Hit Reset, But The Street Will Carry A Grudge

By no means is it unheard of for tech companies, including storage companies, to stumble in their early years. With Fusion-io's (NYSE:FIO) fiscal fourth quarter and guidance, management can certainly check that box. The trouble now is the question of how to weigh out the balance of the company's interesting enterprise flash storage technology (and the growing marketing opportunity) with the likelihood that the company can and will execute on that opportunity.

Fusion-io deserves the time it's going to spend in the doghouse. Earlier management was brash and bold, and the Street doesn't necessarily have a problem with that, but the failure to deliver is now an issue. I don't particularly like this company, but even I have to say that the valuation is now at a point where the stock is possibly interesting again if the company doesn't have to reset guidance to a lower level once again.

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http://www.investopedia.com/stock-analysis/081213/fusionio-tries-hit-reset-street-will-carry-grudge-fio-emc-lsi-ibm.aspx

Seeking Alpha: LSI Still Undervalued, As It Shows Hints Of What Lies Ahead

It was six months ago to the day that I wrote about the potential for LSI (LSI), highlighting both the upside if the company executed on opportunities in flash, networking, and storage/servers but also the risk that the path to prosperity would have some bends and potholes. That's proven more or less true so far, as the absolute return over the past half-year (barely positive) is well below that of rival Marvell (MRVL) and the overall Nasdaq composite, but second quarter earnings show some encouraging results.

Provided that the PC market doesn't get even worse (and/or that Marvell doesn't grab even more share), I believe there's still a case to make for LSI as a $9 to $10 stock. While the real ramp in revenue growth and margins isn't likely until 2014, improving sentiment towards chip stocks (at least those outside the wireless space) could pull the stock along in the meantime.

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LSI Still Undervalued, As It Shows Hints Of What Lies Ahead

Investopedia: LSI Looks Too Cheap, But Only If You're A Believer

Investing nearly always calls for some leap of faith – Wall Street is a discounting mechanism, and that requires investors to try to peer into the future and see how industries, markets, and companies will look in a few years' time. If you wait too long, waiting for more certainty on developments, most of the gains will be gone by the time you decide to invest.

I mention this because I think it's a very relevant part of the LSI (NYSE:LSI) story today. As is, the company is not all that exciting. But if you believe that the company's flash technology will lead to share gains in this fast-growing (albeit small) market and that the company can benefit both from a recovery in network spending and increased share in network processors, the prospects for this stock look much more interesting.
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Investopedia: Marvell Unloved, But Does That Mean Undervalued?

It's hardly news to say that Wall Street plays favorites and in doing so sometimes goes well past the bounds of reality with respect to a company's real underlying value. For every ARM Holdings (Nasdaq:ARMH) or Analog Devices (NYSE:ADI), there seems to be at least one undervalued company. The question for shareholders is whether Marvell (Nasdaq:MRVL) deserves to be included in that latter group. While the valuation seems quite undemanding, this company still has a ways to go to convince investors that it still has the competitiveness and the business model to drive better long-term results.

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Seeking Alpha: Apple Vs. Samsung - Avago Wins Either Way

Although many investors, analysts, and writers are deeply invested in the "Apple (AAPL) versus Samsung (SSNLF.PK)/the field" battle, I really don't care who wins. Instead, I try to find companies that can prosper from the overall growth in next-gen wireless devices, and Avago (AVGO) looks like a good candidate. While Apple certainly matters to Avago, I like the company's broader exposure to the handset market, not to mention what I believe to be undervalued opportunities in wired infrastructure and industrial/automotive markets.

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Apple Vs. Samsung - Avago Wins Either Way

Investopedia: ON Semiconductor Seems To Have Found Bottom

This has been a pretty mixed quarter for chip companies. Stalwarts with leverage to mobile devices, like Qualcomm (Nasdaq:QCOM), have held up pretty well, but it's been more challenging for the companies with broader market focuses. While ON Semiconductor's (Nasdaq:ONNN) reported earnings didn't look all that great at first blush, it does appear that the business has bottomed. More importantly, management has made good progress on improving both the growth and margin profile of the business for the next move up in the industry.
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Seeking Alpha: The Potential Is There For LSI, But Will They Grab It?

Wanting to like a company or stock thesis can be very dangerous to your portfolio returns, as you often fall into the trap of hearing only the good news and giving the benefit of the doubt to numbers and projections. That's one of my biggest concerns about LSI Corporation (LSI), as I really like the company's long-term potential in server and flash storage products. The revenue and margin potential is definitely there, but the company's uneven historical performance and potential competition calls for real leaps of faith in terms of future margins.

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The Potential Is There For LSI, But Will They Grab It?

Investopedia: Weighing The Improvements At LSI Against Industry Challenges

While it often helps to have strong end markets when trying to turnaround or improve operations, it isn't always a prerequisite. LSI Corporation (NYSE:LSI) management has done a pretty good job of reorienting this business towards better growth and margin, but key end markets like PCs and mobile carriers haven't been doing all that well of late. Consequently, LSI may yet be cheap enough for investors to see worthwhile gains from here if and when these markets improve

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Investopedia: Marvell Seems Cheap But Long-Term Growth May Be A Concern

With the worst of the hard drive market disruptions behind it, Marvell Technology (Nasdaq:MRVL) should be looking at much easier comps and better growth in 2012. While the stock does look somewhat undervalued amongst its semiconductor peers, investors may want to give some thought to the company's long-run growth prospects when deciding whether this is a good trade or a long-term holding.

A Weak End to a Challenging Year  
With supply issues in hard drives messing up the storage market and inventory run-downs in the Chinese wireless market, this was not going to be a strong quarter for Marvell. Revenue fell 22% on a sequential basis, as surprisingly strong networking results (down 1%) made relatively little difference against a 21% decline in mobile/wireless and a 31% decline in storage. That said, none of this was really surprising.

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Investopedia: PMC-Sierra May Have More Growth In Store

It probably sounds like a double-whammy to consider a stock that is exposed to both the semiconductor cycle and the enterprise/carrier spending cycle as well. For better or worse, that's the situation for PMC-Sierra (Nasdaq:PMCS) as the veteran semiconductor company continues to leverage itself to emerging growth opportunities in storage and cloud computing while balancing out its legacy businesses in optical networking and wireless infrastructure.

Another Chip Company with Tough Q4 Numbers 

It's not exactly challenging to find semiconductor companies that had some weak spots in their December quarter reports. Consequently, PMCS is not exactly in rare company with a quarterly report that was just a little light.

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Investopedia: Can Fusion-IO Outrun The Tiger?

There is a saying that goes, "you don't have to be faster than the tiger, you just have to be faster than your slowest friend." That may be a constructive way of thinking about Fusion-IO (NYSE:FIO) today. There's no question that this is a high-growth tech stock with a huge multiple and huge expectations, but that has never stopped those tech stocks that can deliver the goods. (For more, see Earning Forecasts: A Primer.)

Big Data 2.0  
In some respects, what Fusion-IO seeks to do is relatively simple. In the same way that solid-state drives (SSD) have offered consumers considerably better performance than hard disk drives, Fusion-IO is trying to bring the advantages of flash/SSD memory to the enterprise data market.

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Investopedia: Clouds Mean Bright Days For NetApp

Semiconductors are in the doldrums; the PC market seems to be on life support; and the health of routers and switches seems to depend on whichever company reported last. Storage, though, is clearly an area of strength, as companies struggle to stay on top of their own data management and cloud computing demands ever-increasing hardware support. 


That is good news for NetApp (Nasdaq:NTAP). This storage company seems to get dismissed from time to time as a weak sister to EMC (NYSE:EMC), but the fact remains that it is a growing player in a growing market with its own independent strategy and an architecture approach that some customers seem to prefer.

Is the Fourth Quarter a Return to Beat-and-Raise?
NetApp had a little hiccup with its last quarter, but the company seems to have gotten back on track. Revenue rose 22% this quarter, and the $1.43 billion in reported sales surpassed even the high end of the range. Investors should realize, though, that the company had to change its revenue recognition policies and that boosted revenue such that actual "apples to apples" results were closer to the expected level. 



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Seagate Decides To Stay Public

With mergers going off left and right in the tech space, particularly in the storage area, it is a bit of a switch to hear about a deal that does not happen. But that is the case for disk drive maker Seagate Technology (NYSE:STX), which announced after the close on Monday that the board had decided to end discussions of selling the company to private equity investors. 

Where was the Bar?
Although the company had publicly acknowledged some indications of interest in taking the country private back in October, the recent rumors were that potential deals were falling apart as private equity groups balked at the price. There has been no public discussion of what Seagate believed was a "fair price", but it would not be surprising if $20 was the starting point that the board had in mind. After all, even though companies like 3Par ,being acquired by Hewlett-Packard (NYSE:HPQ), and Isilon Systems (Nasdaq:ISLN), being acquired by EMC (NYSE:EMC), are very different than Seagate, there might nevertheless have been an element of "storage is storage" mentality and an expectation from the board of a solid premium. 


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Black Christmas For PC Chips?

It is good practice for investors to cast their information nets as wide as possible to monitor their holdings and make better investment decisions. To that point, although Dell (Nasdaq: DELL) did not have a bad recent quarter, some semiconductor investors may not be so happy with some of the details. Reading tea leaves like this is hardly a perfect science, but there were a few scattered details that could become a problem. 

PC, Or Not PC?
In many respects, Dell had a solid quarter. Margins were particularly strong and the company produced solid operating leverage. Looking through to what drives chip demand, though, the picture gets a little bit murky. Overall, desktop sales rose 21% annually but fell 6% sequentially and notebook ("mobility") sales were up 16% and 3% for those same respective periods. Moreover, stripping ASP growth out of the equation makes the unit growth a little more concerning.

On top of all that, management's comment that the "refresh cycle is in full bloom" is a little odd, given that sequential guidance for the fourth quarter was not that great. Again, this is not about Dell's performance - the issue is whether or not there is still solid PC and notebook demand sufficient to power the chip stocks that supply the market. (For more, see 4 Cheap, High-Quality Stocks.) 

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http://stocks.investopedia.com/stock-analysis/2010/Whither-Or-Wither-For-PC-Chips-INTC-DELL-NVDA-MRVL-QCOM-ATML-ONNN1123.aspx