As a partner of [company name deleted - as it was recently formed], I attended the Analysts’ Day at nVidia on June 16, 2009. Excerpts follow.
Published by Bapcha Murty //
Posted on June 9th, 2009 in Uncategorized
Among the companies that we looked at in the prior article, many can be eliminated with ease. So, let’s get the job done systematically.
a. Applied Materials. With pristine financials and the enviable position as the #1 purveyor of machines that the semiconductor industry needs to make their chips, Applied flies through the initial screen.
b. [...]
Published by Bapcha Murty //
Posted on June 9th, 2009 in Uncategorized
Semiconductor sales for 2009 will be down anywhere up to 25% from about $250 Billion in 2008, and with sales exceeding 2008 levels only in 2012 or 2013. ASP’s [average selling price] for all memory makers is in the trash, and for high-margin companies like Linear (LLTC), Maxim (MXIM), Analog Devices (ADI); their sales to [...]
Published by Bapcha Murty //
Among the companies that we looked at in the prior article, many can be eliminated with ease. So, let’s get the job done systematically.
The five companies that will survive this down-turn in the semiconductor market, and thrive afterwards, have a few things in common.
a. A strong balance sheet, with a large cash position [or in Linear's case, a manageable debt, and a fantastic competitive position as reflected by gross margins].
b. An excellent competitive position.
c. Strong management that is still “invested” in the company.
d. Has survived prior attacks on its competitive position.
and finally,
e. Pass my rigorous standards.
Published by Bapcha Murty //
Yesterday morning, Gartner and IDC had sobering news for the semiconductor business. Sales will be down anywhere from 15% to 33% from about $250 Billion in 2008, and with sales exceeding 2008 levels only in 2012 or 2013. ASP’s [average selling price] for all memory makers is in the trash, and even high margin companies are seeing their market share contract. So, who can survive this nuclear winter ? Obviously, the ones with a better competitive position, and a huge cash hoard.
Published by Bapcha Murty //
The semiconductor industry has been in the dumps for eighteen months now, with another six months to go – before exhibiting any signs of recovery. Yet, there are cash rich companies whose equities will do well through the course of 2009.
Published by Bapcha Murty //
Q: When is it the correct time to buy into a cyclical stock/company/industry ?
A: The correct time to nibble is when the leading company is losing money – while the second and third tier companies have NO pricing power. The clear time to buy more is when pricing power returns to the industry – through [...]
Published by Bapcha Murty //
A little over a month ago, I wrote that the worst was not yet behind nVidia. UBS was second in line, and they based their decision on competition and growth worries. My basis for the need to hold-off on NVDA’s stock was based on both research and intuition. For starters, they had a manufacturing issue that cost [...]
Published by Bapcha Murty //
There have been a lot of road-kills in the graphics business [Chips & Technologies, S3, Cirrus Logic, Tseng Labs come to mind], which is always cyclical, and “owned” by a player or two. For now, nVidia is one of the big two, and will continue to be – till the next major breakthrough in [...]
Published by Bapcha Murty //
