Weekly Tech Update: BRCM, CREE, MU, QCOM, TXN

The semiconductor industry has been one of the strongest performing sectors in 2014 driven by the improvement in the PC market, continued strength in personal, network and service provider communications, and increasing electronics adoption in the global markets.  However, in the recent past, there have been signs of decreased demand in at least certain markets and regions. A leading microcontroller manufacturer, Microchip (MCHP, not covered) pre-announced negatively, attributing lower-than-expected revenues to a fall of in demand in China.

We are in the midst of the earnings season and look forward to the same to get a better perspective on different companies’ view on the long-term industry demand. Below is a weekly update for some of the technology companies that Trefis covers.

See Our Complete Analysis for These Companies Here

Broadcom

Last week, Broadcom (NASDAQ:BRCM) released its Q3 2014 earnings. (Read Our Earnings Article) The company introduced a new chipset for DSL infrastructure which delivers faster broadband over installed copper cabling, and launched the industry’s first single-chip Gigabit-class DSL device for multi-service, multimedia gateways. (Read Press Releases)

Broadcom’s stock price increased by more than 10% last week, mainly on account of the strong earning result. Our valuation of $39 for Broadcom is slightly lower than the current market price (market cap of $23.5 billion). Our 2014 revenue and net income estimates for the company stand at $8.7 billion and 720 million respectively. Our non-GAAP diluted EPS forecast is $2.98, as compared to the market consensus of $2.92. We are yet to update our model for the Q3 2014 earnings.

CREE

LED manufacturer, Cree (NASDAQ:CREE) introduced a new platform which promises to reduce system costs by up to 40% in most lighting applications. The company also reported its Q1 2015 earnings last week. (Read Our Earnings Article) Cree’s stock price, which has been on the downhill since the company announced its preliminary results for Q1 2015, declined by approximately 10% last week. Our valuation of $52 for the company is now at a more than 70% premium to the current market price. For calendar year 2014, we forecast Cree’s revenue and net income at $1.77 billion and $160 million, respectively. For fiscal year 2015 (ended June), we estimate non-GAAP diluted EPS of $1.87 as compared to the market consensus of $1.08. We are yet to update our model for the Q1 2015 earnings.

Micron

Last week, memory chipmaker Micron Technology (NASDAQ:MU) received an unsolicited mini-tender offer by TRC Capital to purchase up to 4,000,000 shares of Micron’s common stock, at a price of $27.00 per share. Micron recommended its shareholders to reject the offer because the offer price is below the current market price and is subject to numerous conditions. (Read Press Release)

Our $32 valuation for Micron is marginally above the current market price. The company has a market cap of nearly $33 billion. For calendar year 2014, we forecast revenue, net income and diluted non-GAAP net income of approximately $17 billion, $2.4 billion and $3.15, respectively.

Qualcomm

Last week, Qualcomm introduced the only end-to-end ecosystem of 802.11ac 2.0 solutions with multi-user multi-input/multi-output (MU-MIMO) technology to bring faster WiFi connectivity to home networks, mobile devices and consumer electronics. (Read Press Release)

Qualcomm’s stock price increased marginally (~5%) last week. Our price estimate of $74 for Qualcomm (market cap of 125 billion) is only slightly below the current market price of $76 (market cap of $129 billion). We expect the company to report revenue of around $28 billion and net income of $7 billion for calendar year 2014. For fiscal year 2014 (ended September), we forecast non-GAAP diluted EPS of $5.14 as compared to market consensus of $5.31.

Texas Instruments

Last week, Texas Instruments (NASDAQ:TXN) added some new products to its portfolio and announced its Q3 2014 earnings. (Read Press Release & Our Earnings Article) TI’s stock price increased almost 10% last week mainly on account of its strong performance in Q3 2014. Our valuation of $42 (~ $45 billion market cap) for TI is now more than 10% below the current market price. We expect the company to report $13.1 billion and $2.6 billion in revenue this year. Our GAAP diluted EPS forecast for TI stands at $2.43 while the market consensus is at $2.51. We are in the process of updating our model for the latest earnings release.

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