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Intersil Corporation Message Board

datagrinder 45 posts  |  Last Activity: Nov 18, 2014 9:57 AM Member since: Sep 9, 1998
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  • Reply to

    The stick is acting like

    by gr0operator Nov 14, 2014 12:56 AM
    datagrinder datagrinder Nov 18, 2014 9:57 AM Flag

    Hi Grade,
    I did. I'm still trying to figure out the royalty trusts. The dividends are huge but taxed as ordinary income - good for IRA. But they are relatively opaque as far as providing info on where the money is coming from and when it could run out - really my lack of understanding. I usually have to read up and gather info for awhile before buying; listen to historic CCs, etc. Your suggestions look like very nice picks so they are on my daily watch list now.

    dg,

  • Reply to

    The stick is acting like

    by gr0operator Nov 14, 2014 12:56 AM
    datagrinder datagrinder Nov 17, 2014 6:10 PM Flag

    pbr will most likely continue descending; though the oil that they have is not going away. Oil will be lower in price for awhile, until the glut is cleared. Seems like it will be a year or so. In any event pbr pre-salt production cost is $50barrel - not bad. They have been losing money refining purchased oil - this will now reverse with the lower prices. PBR is probably more speculative than other oils, It seems like the best time to buy oil is during a glut situation, but also more risky until a bottom has been put in.

    dg,

  • Reply to

    Maxim should buy CRUS...ASAP

    by pjinvestmentco Nov 17, 2014 10:12 AM
    datagrinder datagrinder Nov 17, 2014 3:36 PM Flag

    Grade, you are right; one way or another, the tax issue will be resolved; and probably sooner than later.
    Remember when Hackworth bought all those fabs? Hard to believe that after all this time the losses would be recovered.

    dg,

  • Reply to

    Maxim should buy CRUS...ASAP

    by pjinvestmentco Nov 17, 2014 10:12 AM
    datagrinder datagrinder Nov 17, 2014 2:30 PM Flag

    Right, well I guess Samsung isn't a door then.

    dg,

  • Reply to

    Maxim should buy CRUS...ASAP

    by pjinvestmentco Nov 17, 2014 10:12 AM
    datagrinder datagrinder Nov 17, 2014 12:18 PM Flag

    Something like this will happen if CRUS doesn't fix the tax issue. Not advocating that they fix it or find a solution, just that other semi's already exist with gamed tax structures in place, and they will smell the money. Most in the industry had a hard time figuring out why Avago took out LSI. Mostly it was relative tax rates with Avago based offshore in singapore or indonesia I believe. Also Marvel, which competed with LSI and now Avago, is based in Bermuda. I don't see CRUS playing these tax games, but others in the industry will smell the cash. Then it's just a matter of the price. Avago or another diversified international smartphone components maker would be a more likely buyer. The analog guys don't want to play in the low margin space. They are in competition with each other to pay dividends otherwise return money to shareholders. Also, I'm not saying that CRUS is stuck in the low margin space. They have a lot of room to grow.

    dg,

  • Reply to

    The stick is acting like

    by gr0operator Nov 14, 2014 12:56 AM
    datagrinder datagrinder Nov 15, 2014 3:38 PM Flag

    thanks I'll take a look at these.
    dg,

  • Reply to

    The stick is acting like

    by gr0operator Nov 14, 2014 12:56 AM
    datagrinder datagrinder Nov 15, 2014 12:06 PM Flag

    I'm looking for ideas, what do you have? I'm looking two years out - PBR
    dg,

  • Reply to

    The stick is acting like

    by gr0operator Nov 14, 2014 12:56 AM
    datagrinder datagrinder Nov 14, 2014 12:58 PM Flag

    Grade, I think of lot of the malaise is due to the acquisition; there is usually nothing but grey whenever an acquisition with this level of impact is made, especially first six months. It takes time for the full impact to reach bottom line. Many will need to see accretion before they will invest, and they'll want to see how Wolf will contribute to growth. Also, there hasn't been any statements on cross selling capabilities, mainly into the accounts where wolf has a presence. Possibly the upcoming conference presentations will shed some more light.

    dg,

  • datagrinder by datagrinder Nov 14, 2014 12:49 PM Flag

    US consumer confidence is rising - why? most likely the huge drop in oil prices. As gas prices subsequently decline the pent up demand for consumer discretionaries will be unleashed. Expect this for Christmas and through next year. It will take some time to materialize. This will impact the TV, audio, phone, and car markets in the US and this will have a positive effect on suppliers like CRUS. Not sure to what extent; however there is a pent up demand to replace three year old smart phones though and phone replacement is a logical use of saved gas money (so is food!). It's probably a good time to buy oil also.

    dg,

  • Reply to

    Xiaomi

    by althegambler Nov 9, 2014 8:14 PM
    datagrinder datagrinder Nov 12, 2014 10:08 PM Flag

    Do a search on "Cirrus Logic Xiaomi"; The results will tell you: CRUS is in the Mi3 but only in the mi3 with the tegra processor. Qualcom is in the other design. Not sure how the volume is split. It is the catalog codec. I would guess that the volume is probably not huge with xiaomi at this time, however a design win is a design win.
    dg

  • Reply to

    Apple suppliers are doomed

    by rexobxip Nov 9, 2014 11:02 AM
    datagrinder datagrinder Nov 10, 2014 12:56 PM Flag

    Grade,
    I think your analysis of how apple evaluates the audio codec situation is spot on. CRUS is saving them time, effort, and money, and so they will pay for that service. It cost is 10 to 15M minimum to spin a new codec (the size of Wolfs samsung winning codecs which may be similar to what CRUS supplies to apple, not sure) and the design has to be done right. No room for startups.

    On the contrary there have been a large number of startups in software codec algorithms claiming patentable best of breed algorithms. All of these have failed. The phone manufacture differentiates their product with the algorithm so they'll write their own. Embedded software algorithms have never been a source for an on-going business. The combination of cutting edge silicon combined with the flexibility of accommodating a wide range of algos seems to be the best business model. Of course you still have to be worlds best to succeed, and that to me is the risk in any semi.

    dg,

  • Reply to

    Apple suppliers are doomed

    by rexobxip Nov 9, 2014 11:02 AM
    datagrinder datagrinder Nov 10, 2014 12:18 PM Flag

    I posted about the "moat" last week. Audio codecs are a mature technology; not a place for startups anymore. The lower margin reduces competition naturally. The key to audio as an on going business is low power. It's true that any of the algos can be integrated into the apps processor. However it is the "always listening with voice command" feature that is a new development and so far this requires external very low power silicon. Same is true with sensor management and NXP has done well here. It might take away risk to diversify away from audio, however if standlone audio silicon can become permanent, which seems to be the case for many markets, especially as high end features trickle down, then CRUS becomes a best of breed roll up for anyone who wants higher participation in mobile.

    dg,

  • Reply to

    Apple suppliers are doomed

    by rexobxip Nov 9, 2014 11:02 AM
    datagrinder datagrinder Nov 10, 2014 12:56 AM Flag

    You are being a little pessimistic here. I did get caught in GTATQ, and yes it seems like in that case apple was bullying. However remember that Apple is selling millions and millions of phones. They can not supply all of the technology themselves. They supply the technology that enables them to differentiate and get a lead - the processor. They need to work with suppliers so they can meet very tight introduction deadlines. They are in a race with other very aggressive companies. The margin the Apple gives to CRUS for their codec is actually very good. Good considering these are custom chips and their is no S&A and the R&D is very targeted. Apple tells CRUS what it needs. The operating margins for the products are very good. The analysts don't like the model, but it is a profitable model.

    dg,

  • Reply to

    Peter Eastty Apple hire

    by resetignore Nov 3, 2014 9:05 PM
    datagrinder datagrinder Nov 4, 2014 12:08 AM Flag

    Apple goes directly to TMSC or Samsung to get their own silicon processed. They can do it on any product they want to. They theoretically don't need any external semiconductor suppliers - just a fab and some IP licensing. But strangely enough they haven't gone this route with the audio codec or with many of the other semiconductor components in the phone. Wonder why? Of course the products that CRUS manufacturers for Apple are custom products that feature Apple part numbers. These products run Apple's custom and proprietary software algorithms. Wonder why they are using CRUS analog technology? Apple also has a wifi unit, a digital interface unit, of course they have the microcontroller unit, they have a fledgling LTE unit. Samsung is the same way. I guess they could do everything themselves, but they haven't. Wonder why?

    dg,

  • datagrinder by datagrinder Nov 1, 2014 7:41 PM Flag

    Some analysts use the term "moat" to describe the degree of protection that a company has from competitors. For CRUS the moat has widened and deepened vastly within the last few years. Ironically one of the factors that widens and deepens the moat also causes the most consternation among those who analyze.

    For the longest time the greatest fear was that a top 10 analog player would outcompete crus as incumbent at Apple. Then there was a nagging fear that Wolf could always be brought in to oust CRUS. Well in my opinion, the most likely competitors have always been the top 10 Analogs while Wolf was a thorn. The thorn is gone, and so are most if not all of the top ten analogs. Why? Because of the margin. You see if you listen to the CCs of the top 10, they have built businesses on a 60% margin model. They cannot take business at 45%, literally. Why? Because they are vocal about there cash generation, their stock buybacks, and their dividend payments. They cannot back down without serious stock value consequences. There are two in the top ten who maybe could; but I suspect they would have more leverage over Apple than apple has over them, plus they don't need the headache or risk they have very nice high cash generation businesses already.

    The analysts either can't resolve the 45% business model with 20% operating margins because they don't see it in analog. Most of analog is broad market and the costs are higher; though also the analogs have already committed to giving away their cash flow.

    Just saying, the moat has widened; the competitive risk has reduced. We'll see how cash goes next few quarters, and we'll have to judge growth as is happens.

    dg,

  • datagrinder by datagrinder Oct 31, 2014 6:49 PM Flag

    The audience call had some good information - about Samsung. Samsung has to cut it's costs and it's supplier base and has to stop making so many different types of phones. They can't afford to do business the way they have in the past. At audience they spin this as a positive, but this isn't good news for them. Audience plays in mid range phones and claim they have a technology set that no one else has. Very dubious claim indeed.
    For Wolf/Crus this is potentially very good news because there won't be so many variants and when a design is won volumes will be larger and the design will last longer. Also apart from the audience call, Samsung will be sourcing more of their own semiconductors for use in their own phones to increase profitability. They'll concentrate on all the functions they make: baseband , LTE, and power management. The audio and sensors are too specialized for them so they'll source that from external suppliers. They won't want to use Qualcom because they compete against Qualcom in semiconductors..

    dg,

  • datagrinder by datagrinder Oct 30, 2014 7:36 PM Flag

    The selloff mostly a reaction to slightly narrowed margins and lower than expected wolf results into Samsung. The lower results make wolf the purchase price look iffy. However CRUS needs to get itself out from under Apple in a more meaningful way and I think that the wolf acquisition is the best way to do it. The wolf products appear to be state of the art and are not hindered in any way as far as getting design wins into the broader markets. Achieving higher sales in the broad market will keep margins stable and higher. I hope they are aggressive in marketing the technology that wolf brings - it sounds like they will be.

    Not a lot of talk on the call about the 45nm products - we knew they weren't in current designs, but these will be key to better profitability in future. Also the 20% operating margin model is fine the panic on margins is way overdone. Companies can do well on mid 40's margins if their R&D and SGA can be scaled, as they are doing here. Most semi analysts don't see this model and are fearful of future margin hits - but that's always been the case in tech.

    dg

  • Reply to

    Ho hum

    by qtmssngarnd Oct 13, 2014 7:58 PM
    datagrinder datagrinder Oct 29, 2014 7:58 PM Flag

    Boards very rarely dump their CEOs even if the CEO is pychopath criminal. Here the case might have been that Coleman wanted to spend more than the board wanted to and made an ultimatum. It has to be very frustrating for any aggressive CEO to work at UIS due to the constraints of lowering revenue (reverse growth) and increased cash funding of the pension funds. Most CEOs run away quickly from these situations. With that said, with HP and IBM going through turbulence there are most likely some very OK resumes coming in - though most ex-HP and ex-IBM managers have more often destroyed corporate value when they become CEOS rather than create value.

    Until interest rates go up it will be hard for UIS to be aggressive in marketing due to cash outlays. I hope any new CEO or the board is NOT thinking about any new equity/convertable issuance - the stockholders would revolt, though I know in the back of their mind they probably are and this and the pension funding will keep a lid on the price.

    dg,

  • Reply to

    Why is book value negative?

    by ogmodnar Oct 22, 2014 3:54 PM
    datagrinder datagrinder Oct 28, 2014 9:49 PM Flag

    It's true that the huge amount of pension iability makes UIS highly speculative. Ten years ago however this liability was a huge asset - only they didn't tell anyone. One would only own these shares if they thought the 10 year rate was going to increase a few points over time. If it does (some would say it's only a matter of time) then this deficit could be completely removed. Not saying that it will happen, only that it could happen.

    For example, if low oil prices spark the economy then watch out because then inflation is just around the corner, and with inflation comes way higher 10 year treasury rates.

    dg,

  • Reply to

    Why is book value negative?

    by ogmodnar Oct 22, 2014 3:54 PM
    datagrinder datagrinder Oct 22, 2014 8:14 PM Flag

    Read the balance sheet statement. Bank debt is very low. However this line item is high:

    Long-term postretirement liabilities

    The thing to remember about this number it is a computed number, not a fixed debt. This number can change drastically depending on a government supplied interest rate differential vs. today's prevailing interest rate.

    While it is worrisome to some extent, it is not a debt that can be called by a bank or one that needs to be re-financed. Or put another this is NOT a debt that a bank can call to send the company to bankruptcy.

    dg,

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