The FinancialContent Network     SocialPicks Community   |   MarketMinute Monitor   |   MarketMinute Market Updates   |   MarketMinute Stock News
SocialPicks
   Sign Up   |   Log In   |   What is SocialPicks?     

Samsung Seen Cutting Chip Inventory; Handset Semi Stocks Get Clobbered

 Oct 22, 2009 03:49 PM UTC
Percentile Score: N/A
Tracked Blogger
Symbol Sentiment Start Return Closed
RFMD n/a
SWKS n/a
ARMH n/a
TQNT n/a
QCOM n/a
ANAD n/a

Graphic_arrow1 Via BARRONS.com: Tech Trader Daily - Barron's Online:  

The Street is unloading shares of chip makers that supply the mobile phone sector, on fears that Samsung is taking steps to reduce inventory.


Several weeks ago, Thomas Weisel Partners analyst Tore Svanberg warned in a research note that Q4 results in the sector could disappoint as Samsung sharply cuts mobile phone production; Avian Securities analyst Avi Cohen followed up with a similarly cautionary note, warning that the Korean phone company had likely overbuilt in the third quarter.


And now the evidence is increasing.


On a conference call with the Street yesterday afternoon, TriQuint Semiconductor (TQNT) CEO Ralph Quinsey noted that the company is seeing one customer “taking action to reduce inventory that is I think significant.” The customer, he says, is based in Korea.


TriQuint, as I noted yesterday, posted weaker-than-expected results for the third quarter, and provided disappointing guidance; the stock is getting shredded today.


Meanwhile, the thinly veiled reference to Samsung has received attention on the Street, triggering selling in a number of other handset chip stocks.


D. A. Davidson analyst Aalok Shah today cut his rating on Anadigics (ANAD) to Underperform from Neutral, specifically citing TriQuint’s remark on the call. He notes that with Samsung a 10%-plus customer for ANAD, “there is increased risk to their topline.”


Shah also cut his price target on Buy-rated RF Micro Devices (RFMD) to $6, from $7, against citing the Samsung inventory issue. He notes that RFMD’s biggest customer in the sector by far is Nokia, although Samsung also is a 10%-plus customer.


Shah lowered his TQNT rating to Neutral from Buy, with a new target of $7, down from $10.


Meanwhile, Shah also downgrades ARM Holdings (ARMH) to Neutral from Buy, asserting that the stock “appears to be approaching full value,” and noting that the company gets 60%-plus of its revenue from the mobile sector where, as noted, he sees “signs of inventory builds.”


Not least, Shah trimmed his 2010 EPS estimate for Buy-rated Qualcomm (QCOM), a move that comes just a week after his previous downward revision. He says that his chipset estimates for next year were a a bit too high; he also sees the company feel the effects of both a slower ramp of 3G in China and some ASP pressure in chipsets. Those issues, combined with the Samsung situation “leads us to take a more cautious approach to our estimates,” he writes. He now thinks QCOM could come in a dime or so light next year compared with the Street consensus, which is currently $2.33.


In today’s trading:



  • Triqunt is down $2.21, or 27.3%, to $5.89.

  • RF Micro is down 30 cents, or 7%, to $3.99.

  • Skyworks Solutions (SWKS), a rival of RF Micro, is down 73 cents, or 6.3%, o $10.91.

  • Anadigics is down 30 cents, or 7%, to $3.97.

  • Qualcomm is down 64 cents, or 1.6%, to $40.77.

  • ARM Holdings is down 24 cents, or 3.1%, to $7.50.

 Graphic_website1 Read the rest of original post »



Add Comment

Be the first to comment on this story and earn 2 points.

Your Comment



IN THE PRESS
Press_forbes Press_washingtonpost Press_wsj Press_npr Press_techcrunch