Weekly Tech Update: CREE, AMD, QCOM, TXN

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The semiconductor industry was one of the strongest performing sectors in 2014, driven by the continued strength in personal, network and service provider communications, and increasing electronics adoption around the world. According to The Semiconductor Industry Association (SIA), the global semiconductor industry posted record sales of $336 billion in 2014, a 9.9% increase from 2013. [1] Annual sales increased in all the regional markets for the first time since 2010. The semiconductor industry has achieved record sales in two consecutive years, and the SIA believes that the market is well-positioned for continued growth in 2015 and beyond.

The Philadelphia Semiconductor Index (SOX) increased by approximately 30% in 2014, as compared to a 12% growth in the S&P 500 index. Though the SOX declined marginally in January, it has recovered since then and is currently trading around the 700 level.

Below is a weekly update for some of the technology companies that Trefis covers.

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See Our Complete Analysis for These Companies Here

CREE

Leading LED manufacturer, Cree (NASDAQ:CREE) added new LED arrays to its industry leading CXA LED array family. (Read Press Release and our article) Cree’s stock price traded between $37 to $38 last week. Our price estimate of $37 for the company is almost in line with the current market price, and translates into market cap of around $4.4 billion. We estimate the company will report revenue and net income of $1.95 billion and $120 million, respectively, for calendar year 2015. For fiscal year 2015 (fiscal year ends in June) we forecast non-GAAP EPS of $1.72.

AMD

Last week, AMD (NYSE:AMD) announced that Jagex Games Studios is using its SeaMicro SM15000e ultra-dense servers to efficiently expand its data center. AMD’s FirePro M5100 mobile professional graphics were also selected by Panasonic for its new Toughbook CF-54. (Read Press Releases) AMD’s stock traded close to $3 last week, which translated into market cap of $2.4 billion. Our price estimate of $4.12 for AMD is at a considerable premium to the current market price. For 2015, we estimate AMD to report revenue and net income of $5.8 billion and $225 million, respectively.

Qualcomm

Qualcomm (NASDAQ:QCOM) introduced its next-generation Snapdragon 600 and 400 tier processors for high performance, high volume smartphones, last week. (Read Press Release) Qualcomm’s stock price traded between $70 – $71 last week. The company has a current market cap of approximately $117 billion. Our valuation of $72 for the company is slightly above the current market price. We expect Qualcomm to report revenue of around $29 billion and net income of $6.25 billion for calendar year 2015. For fiscal year 2015 (fiscal year ends in September), we forecast non-GAAP diluted EPS of $4.68 as compared to market consensus of $4.96.

Texas Instruments

Last week, Texas Instruments (NASDAQ:TXN) announced the availability of the SimpleLink modules for Internet-of-Things applications, allowing makers of web-connected embedded and wearable devices to quickly add Wi-Fi connectivity. (Read: TI Introduces New Modules To Enable Faster WiFi Connectivity For IoT Device) Texas Instruments’ stock currently trades around $58, which translates into market cap of $61.5 billion. Our price estimate of $49 for the company is at an approximate 15% discount to the current market price. We estimate TI to report revenue and net income of $13.6 billion and $3.05 billion this year, respectively. Our non-GAAP estimate for 2015 stands at $2.99 as compared to the market consensus of $2.90.

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Notes:
  1. Global Semiconductor Industry Posts Record Sales in 2014, SIA, February 2, 2015 []