Weekly Tech Update: INTC, CREE, FFIV, QCOM, TXN

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Intel

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. Despite macroeconomic challenges, the SIA recently reported that worldwide sales of semiconductors reached $83.1 billion (a 6% increase) during Q1 2015 compared to Q1 2014. [2]  The SIA believes that the semiconductor market is well-positioned for continued growth in 2015 and beyond.

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

See Our Complete Analysis for These Companies Here

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Intel

Intel (NASDAQ:INTC) announced that it will deliver the opening keynote at Computex 2015 in Taipei, Taiwan, next month. The company will introduce and showcase a range of exciting new computing experiences from the PC to IoT that will enable a smart and connected world. Last week, Asus announced the availability of Zen Force 2, the first smartphone powered by an Intel Atom processor paired with the Intel LTE advanced modem, in North America. Intel also unveiled enhanced containers, cloud security capabilities at the OpenStack summit last week. (Read Press Releases)

Our $35 valuation for Intel is marginally higher than the current market price. Intel’s stock traded close to $33 last week. The company has a current market cap of $159 billion. For 2015, we forecast Intel to report revenue and net income of approximately $57 billion and $13 billion, respectively. Our non-GAAP estimate of $2.58 for 2015 is above the market consensus of $2.14.

CREE

Leading LED manufacturer Cree (NASDAQ:CREE) announced that its power and radio frequency business segment will issue shares in a IPO to be a separate publicly traded company. The company has filed a registration statement with the U.S. Securities and Exchange Commission. (Read: Cree Plans To Spin-Off Its Power And RF Division To Unlock Its Full ValueOur valuation of $35 per share for Cree is at an approximate 15% premium to the current market price of $31. Cree has a current market cap of approximately $3.5 billion. We estimate Cree will report revenue and net income of $1.8 billion and $113 million, respectively, for calendar year 2015. For fiscal year 2015 (fiscal year ends in June) we forecast GAAP EPS of $1.15, whereas the market consensus stands at $1.07.

F5 Networks

Last week, F5 Networks (NASDAQ:FFIV) launched a new cloud-delivered managed service in EMEA to defend against web application attacks and ensure compliance across dynamic cloud and data centre environments. The company also released a survey highlighting how financial services organizations across EMEA are increasingly exposed to and concerned about the rising menace of web fraud threats. (Read Press Releases)

F5′s stock fluctuated between $126 and $127 last week. The company has a current market cap of $9.2 billion. Our price estimate of $128 for F5 Networks is almost in line with the current market price. For calendar year 2015, we forecast F5 to report revenue and net income of $2 billion and $220 million, respectively. For fiscal year 2015 (fiscal year ends in September), our non-GAAP EPS estimate stands at $6.37, which is slightly lower than the market consensus of $6.43.

Qualcomm

Leading mobile chipmaker Qualcomm (NASDAQ:QCOM) initiated accelerated share repurchase agreements with two financial institutions to repurchase an aggregate of $5.0 billion of Qualcomm’s common stock, with an initial delivery of approximately 57.7 million shares. (Read Press Release) The company’s stock traded in the $69 – $71 range last week. Our $71 valuation for Qualcomm is almost in line with the current market price, which translates into market cap of $115 billion. For calendar year 2015, we forecast Qualcomm to report revenue and net income of $29 billion and $6.7 billion, respectively. For fiscal year 2015 (ended September), our non-GAAP estimate stands at $4.68 compared to the market consensus of $4.82.

Texas Instruments

Last week, Texas Instruments (NASDAQ:TXN) introduced new ultra-power FRAM microcontrollers which enable context save and restore across the company’s MSP430 FRAM microcontroller family. The company also launched the first power management chipset with intelligent digital control and a unique body-diode sensing feature to optimize secondary-side synchronous rectification in next-generation AC/DC and isolated DC/DC power supplies. (Read Press Releases)

TI’s stock price fluctuated between $55 and $56 last week. The company has a current market cap of approximately $59 billion. Our price estimate of $50 for Texas Instruments is at an approximate 10% discount to the current market price. We estimate the company will report revenue and net income of $13.9 billion and $3.12 billion this year, respectively. Our non-GAAP earnings per share (EPS) estimate for 2015 stands at $3.00 compared to the market consensus of $2.70.

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Notes:
  1. Global Semiconductor Industry Posts Record Sales in 2014, SIA, February 2, 2015 []
  2. First Quarter Semiconductor Sales Up 6 Percent Compared to Last Year, Semiconductor Industry Association, May 4, 2015 []