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Synopsys Inc. Message Board

lakers_w 38 posts  |  Last Activity: Aug 17, 2014 5:56 AM Member since: Jun 13, 2000
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  • MannKind: Looking Beyond The Short-Term Disappointment

    Aug. 12, 2014 10:00 AM ET | by George Rho | about: mnkd
    Summary

    The terms of the marketing partnership is clearly a near-term disappointment.
    MannKind couldn't have found a better partner for the long haul, though.
    Sanofi optimizes the chances of Afrezza achieving rapid and substantial commercial success.
    MannKind Corporation (NASDAQ: MNKD) and France-based Sanofi (NYSE: SNY) announced early yesterday morning (August 11, 2014) that they have entered into aworldwide exclusive licensing agreement for the development and commercialization of Afrezza®, MannKind's recently approved rapid-acting inhaled insulin therapy for adults with type 1 and type 2 diabetes. Under the collaboration and license agreement, Sanofi will be responsible for global commercial, regulatory and development activities. Under a separate supply agreement, MannKind will manufacture Afrezza at its facility in Danbury, Connecticut. In addition, the companies are planning to collaborate to expand manufacturing capacity to meet global demand as necessary. MannKind will receive an upfront payment of $150 million and potential milestone payments of up to $775 million. The milestone payments are dependent upon specific regulatory and development targets, as well as sales thresholds. The two companies will share profits and losses on a global basis, with Sanofi retaining 65% and MannKind receiving 35%. The huge French concern has agreed to advance to MannKind its share of the collaboration's expenses up to a limit of $175 million. The companies plan to launch Afrezza in the United States in the first quarter of 2015.

    Sanofi May Just Be the Perfect Partner

    Sanofi, which we recommended just yesterday, may be the ideal partner to market MannKind's Afrezza, underscored by both a long-established global presence in the diabetes sector and a complementary portfolio of products. The company has 90 years of experience selling insulin, most notably long-acting basal insulin Lantus, which is not only the best-selling insulin product in the world, with sales likely to approximate $8.7 billion in 2014, but was also used in conjunction with Afrezza in its latest clinical trials. That's not all, it sells diabetes products in some 120 countries, supported by a salesforce that totals about 32,000, including almost 10,000 in the United States where a large percentage of Lantus revenues are generated. Sanofi's impressive record of successfully introducing new products and building sales strongly suggests that its selection has substantially reduced the commercialization risk of Afrezza. Moreover, considering the facts that Lantus loses patent protection next year and Afrezza is the ideal complement to its long-acting insulin, the marketing partner will clearly be strongly motivated to sell MannKind's prandial inhaled insulin.

    The Deal Has Strongly Positive Financial Implications

    As noted above, the terms of the agreement include an upfront payment of $150 million, which should be received shortly. So, factoring in the $41.2 million cash balance as of June 30, 2014 and the $40.0 million received from Deerfield on July 18th, MannKind will have an atypically large cash cushion going forward. The details of the milestone payments haven't been spelled out yet, but the biotech stands to receive another $75 million for achieving certain development and manufacturing objectives, $50 million for Afrezza getting to market in Japan and Europe, and up to $650 million for reaching certain sales milestones, the first one at $250 million. On the cash outflow side, the most significant is the $100 million in convertible debt that matures August 15, 2015. Given a conversion price ($6.80/share) that's considerably below the prevailing market price, we think there's a strong likelihood that the debt will be converted into some 14.7 million common shares, obviating the need to shell out $100 million. As well, although the company will be responsible for what will undoubtedly be losses stemming from Afrezza's early days on the market, a loan facility (for $175 million) from Sanofi will most likely be sufficient to cover the red ink until profits start to flow. Significantly, too, Sanofi will assume responsibility for conducting additional clinical trials, conducting the post-marketing studies required by the Food & Drug Administration, and making regulatory submissions in all other major markets. All of the above, meanwhile, puts MannKind in a position to focus its growing resources (and management attention) on advancing its other R&D prospects, most certainly including the Technosphere drug delivery platform that has been validated by the Afrezza approval.

    Well Positioned for the Long Run

    MannKind shares initially gapped up on the announcement of the long-awaited partnership agreement. They spent most of the day giving up a good part of the gains, however, as investors digested the details of the deal. Some stockholders, including the author, were disappointed that the transaction announced wasn't a buyout of the company. Others, no doubt, weren't happy with the relatively small upfront payment, nor with the rather nebulous profit sharing arrangement. Unfortunately also, this angst wasn't alleviated by management during two separate conference calls when executives from both MannKind and Sanofi declined to comment on marketing strategy, pricing, and other variables that would allow analysts to better assess the agreement and construct earnings models, citing either competitive reasons or the existence of some uncertainty on their part.

    All that said, management has thus far achieved all of its frequently stated objectives. Most significant, MannKind now has an FDA-approved novel new insulin product that targets the largest therapeutic market in the world. Equally important, the biotech may have secured the perfect partner to sell the new insulin product around the world. One can quibble about the terms of the deal, but it would be difficult to argue with the proposition that Sanofi optimizes Afrezza's chances of achieving substantial and rapid commercial success. MannKind perhaps could have extracted a few hundred million more dollars in upfront money or a slightly better profit sharing split from a different potential partner, but management decided that the deal with Sanofi offered the best long-term possibilities. Interestingly, during one of the conference calls, the company's chief financial officer noted that the 65/35 split equated to a roughly mid-20% royalty rate, a metric that most investors would probably have an easier time understanding and a figure with which they would most likely be content. All in all, expectations and disappointments aside, MannKind seems well positioned for the long haul. The upfront fee is certainly far less than we had anticipated, but the implied royalty rate is in line with expectations. We will update our earnings and share-price projections after the company has published more details of the agreement and provided better guidance on accounting treatment for milestone payments and profits received. For now, we see no reason to change our "buy" recommendation.

  • Evaluating MannKind (MNKD) & Sanofi (SNY) Agreement for Afrezza

    By Last Financier - 1 day ago

    About MNKD, SNY

    http://m.gurufocus.com/news_read.php?id=273125

    MannKind (MNKD) has seen volatile price swings upon the partnership announcement for Afrezza with Sanofi (SNY). MNKD stock is down ~9% since the announcement. Full details of the collaboration have not yet been disclosed and neither have Afrezza projections. Therefore, much of the ongoing price movements are due to speculation. With that said though, there are takeaways from this deal.

    Overview of Terms

    MannKind will receive an upfront $150M payment and potential milestones of up to $775M, depending upon specific regulatory, development and sales targets. Sanofi and MannKind will share profits and losses at a 65/35 split, respectively. Sanofi has also agreed to advance MannKind a loan of up to $175M to cover its share of Afrezza expenses that MannKind will need to repay.

    Sanofi Stopgap for Lantus Patent Expiration

    Lantus, the long-acting basal insulin that has been SNY’s blockbuster diabetes drug with $7.5B sales in 2013 will expire in the US and most of the EU by May 2015. Sanofi needed to minimize the revenue impact of generics and has taken a step by partnering with MannKind. Sanofi’s sales force, which has pushed the world’s leading diabetic drug, will integrate Afrezza when the companies plan to launch in Q1 2015. Therefore, both MannKind and Sanofi are relying on Afrezza to be successful.

    Financially, Sanofi gains majority access to a potentially multi-billion dollar drug for less than a billion ($925M to be exact). It seems Sanofi was able to avoid the regulatory risk with Afrezza’s FDA approval and only taking on marketing risk (which they are global leaders for diabetes). At a first glance, this deal was a big win for Sanofi.

    Why MannKind is Selling Off

    Market’s original reaction to MannKind’s announcement was that management gave away 65% of Afrezza for less than $1B. However, as mentioned above, the final details of the agreement have not yet been released, so a thorough analysis is hard to conduct.

    MannKind’s management primary goal was to see Afrezza succeed. To realize this, the company secured the leading global pharma in the diabetes care market. With Sanofi’s expertise and resources, it’s unlikely to see Afrezza flop. With Sanofi on their corner, much of the marketing risk is taken off the table for MannKind. Without looking at the figures, the deal makes lots of sense for MannKind.

    I believe the market had higher expectations (maybe too high) on the terms of a Afrezza deal. A revenue agreement, instead of P/L, would have been more beneficial. However, I believe MannKind was set on having Sanofi as their partner, and thus took less favorable terms to ensure the marketing success of Afrezza.

    Additionally, MannKind does not have any upcoming catalysts that event driven investors are interested in. With approval and partnership announcement, MannKind has had quite the eventful summer. The drug won’t hit markets until Q1 2015, with sales data expected sometime in Q3 2015. During this time, MannKind could be seen as “dead money” by the investment community, thus leading to the selloff.

    Projecting 2015

    Financially, MannKind reduced development costs by 65%. The $175M loan that MannKind received from Sanofi indicates that the costs to market Afrezza will be approximately $500M (35% of $500M = $175M). Therefore, it will take about $500M worth of profits for MannKind to get even on the loan.

    The above table assumes that the profit margin from Afrezza will be 20%, which is around the same range Sanofi reports in the company statements. If 2015 sales are $1B, MannKind would receive approximately $70M, excluding milestone payments from Sanofi. At the same time, peak sales of Afrezza have been projected to be more than $1B that I assume in 2015, the launch year.

    Conclusion

    The announced deal has given Sanofi an outlet to sustain its diabetic sales, even with the expiration of Lantus. MannKind landed the market leading diabetic sales force to push Afrezza, however this was done at a high cost. The success of this partnership will be decided by Afrezza’s success in penetrating the diabetes care market.

    Peter.verbeke@facebook - 1 day ago
    I think the 20% operating margin on Afrezza is way too low. That may be the overall number for Sanofy, but it includes 14% R&D and 14% Other + Non-recurring both of which should not count towards the profit margin fro Afrezza. So we're already at 48%.

    Also overall Sanofi Admin/Sales is 25%. Of course I don't know the terms of the deal, but if Sanofi does not hire salesstaff for Afrezza specifically (and I don't think they will), the number should also come down. So I think the Mannkind 35% will come out of slightly over 50% over revenue. So I expect the profit sharing to yield 150% more than your estimate.

  • lakers_w lakers_w May 18, 2014 12:06 AM Flag

    According to Jon Peddie Research, 4.9 million professional graphics cards were sold in 2013. AMD accounted for 20% of the market and shipped 0.98 million professional GPUs (20% of 4.9). We estimate the global professional GPU market to increase to 5.2 million units in 2014. If AMD’s professional GPU market share rises to 30% (as predicted), then it implies that the company will sell 1.6 million GPUs (30% of 5.2), half a million more compared to 2012. Assuming that the entire increase is attributed to the Apple MacPro deal, this implies that Apple will be selling a quarter million MacPro’s (0.5 million divided by 2, since each MacPro uses dual GPUs) this year.

    Considering that the current demand for the new MacPro is outpacing supply by a wide margin, we don’t think selling a quarter million unit of the new MacPro is an unachievable target. The MacPro is a fast selling product and has a current waiting period of 5-6 weeks. [4]

    In the past, Apple has shifted between Nvidia and AMD graphics in the consumer space. If AMD manages to hold onto the Mac Pro deal, it stands to gain significantly in the long run. If the company also manages more design wins with Apple for its consumer products ( iMacs, Mac mini, Macbooks) in the future, it can gain additional share in the market. We estimate the professional graphics segment to account for 7% of AMD’s valuation.

  • AMD may reach 30% share in professional GPU market in 2014
    Monica Chen, Taipei; Joseph Tsai, DIGITIMES [Monday 23 December 2013]
    AMD may reach a 30% share in the professional graphics card market at the end of 2014, up from around 20% currently, because Apple has turned to adopt AMD's FirePro graphics cards for it new Mac Pro products, according to sources from the upstream supply chain.

    The market share rise is also expected to boost AMD's profitability in the year, the sources noted.

    The new Mac Pros have two workstation-level FirePro graphics cards.

    As for server-related products, both AMD's FirePro S10000 and Sky series GPUs adopt PCI Express Gen3, while Nvidia's Tesla K20C is currently still using the PCIe Gen2. Meanwhile, AMD's GPUs adopt OpenCL, an open platform, while Nvidia uses its closed CUDA platform, the sources noted.

  • lakers_w lakers_w May 1, 2014 5:01 PM Flag

    Altera gave a brighter forecast than rival Xilinx (XLNX), which expects revenue to be flat to up 4% sequentially next quarter. We continue to believe that healthy PLD demand from the Chinese 4G LTE buildouts will be a key driver for Altera for the foreseeable future. We believe the shares are attractive at the moment, trading at a discount to our fair value estimate.

    Engineers tend to become trained and well versed in programming PLDs from a specific vendor and will often stay loyal to a company's products because of the familiarity they gain with the software and design tools of that particular platform.

    In addition, once an electronics maker has chosen a PLD for an application, it will tend to stick with the chip because it would have to redesign its products in order to switch logic devices. These dynamics keep lesser PLD competitors at bay and also make it difficult for customers to switch between Altera and Xilinx.

    Additionally, the initial up-front costs of developing cutting-edge ASICs have risen exponentially as semiconductor technologies advance. As a result, the volume necessary to make ASICs cost-effective has grown substantially, which in turn has expanded the market opportunities for PLDs. This trend has allowed the PLD segment to outgrow the overall chip industry and will provide significant tailwinds for Altera.

  • lakers_w lakers_w May 1, 2014 4:57 PM Flag

    As mentioned, if you are not in the company's record books on the date of record, you won't receive the dividend payment. To ensure that you are in the record books, you need to buy the stock at least three business days before the date of record, which also happens to be the day before the ex-dividend date.

    Tailwind From China Propels Growth for This Chipmaker

    Altera (ALTR) reported strong first-quarter results, thanks to higher demand for programmable logic devices from the 4G LTE wireless infrastructure buildout in China. We are maintaining our $41 fair value estimate and narrow Morningstar Economic Moat Rating.

    For the quarter, revenue was $461 million, up 1% from the fourth quarter and an increase from sales of $411 million in the year-ago quarter. First-quarter sales exceeded the firm's January outlook of down 2%-6% sequentially, thanks to strong wireless telecom spending on 4G LTE infrastructure buildouts in China. The Chinese LTE buildouts helped increase PLD sales to the telecom and wireless segment by 14% quarter over quarter. Telecom and wireless is Altera's largest end market and accounted for 49% of total revenue in the quarter. As for the other end market segments, sales to industrial, military, and automotive customers grew 1%. However, revenue fell 20% and 3% quarter over quarter in the networking, computer, and storage segment and the other segment, respectively. Altera achieved a gross margin of 67.1%, down from 68.3% in the fourth quarter, because of product mix associated with higher telecom and wireless PLD sales. Operating income came in at $135 million versus $117 million last quarter.

    For the second quarter, management looks for revenue to grow 2%-6% sequentially, as it expects further growth in the telecom and wireless segment as well as the computer and storage end market. However, it anticipates the industrial, military, and automotive segment to decline while the other segment remains flat. Altera gave a brighter forecast than rival

  • The company also recently declared a quarterly dividend, which is scheduled for Monday, June 2nd. Stockholders of record on Monday, May 12th will be given a dividend of $0.15 per share. This represents a $0.60 dividend on an annualized basis and a yield of 1.84%. The ex-dividend date of this dividend is Thursday, May 8th.

    •Declaration date - This is the date on which the board of directors announces to shareholders and the market as a whole that the company will pay a dividend.
    •Ex-date or Ex-dividend date - On (or after) this date the security trades without its dividend. If you buy a dividend paying stock one day before the ex-dividend you will still get the dividend, but if you buy on the ex-dividend date, you won't get the dividend. Conversely, if you want to sell a stock and still receive a dividend that has been declared you need to sell on (or after) the ex-dividend day. The ex-date is the second business day before the date of record.
    •Date of record - This is the date on which the company looks at its records to see who the shareholders of the company are. An investor must be listed as a holder of record to ensure the right of a dividend payout.
    •Date of payment (payable date) - This is the date the company mails out the dividend to the holder of record. This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled.

    Why All These Dates?
    Ex-dividend dates are used to make sure dividend checks go to the right people. In today's market, settlement of stocks is a T+3 process, which means that when you buy a stock, it takes three days from the transaction date (T) for the change to be entered into the company's record books.

    As mentioned, if you are not in the company's record books on the date of record, you won't receive the dividend payment. To ensure that you are in the record books, you need to buy the stock at least three business days before the dat

  • The 13 year ban on video game consoles in China has ended, but it’s taking a while for companies to be able to capitalize on the reversal. Things are especially tough for Microsoft MSFT -0.27%, not based in nearby Japan like Sony or Nintendo , but they’ve just announced when the Xbox One will make it to Chinese shores.

    The console will arrive this September, thanks to their partnership with BesTV which will take advantage of the Shanghai Free Trade Zone to make systems and games to sell to China. This news actually means the Xbox One could beat the PS4 and Wii U to China, making it the first foreign console to (legally) arrive in the country in over a decade.

    Before Microsoft fans start celebrating that opening up the Xbox One to China will allow it to surge ahead of the PS4 with a billion new potential customers, things are likely to be far more complicated than that.

    In fact, QQ reports that BesTV and Microsoft are only expecting to ship 100,000 Xbox Ones to China this calendar year. It’s not exactly as if the floodgates open and repressed Chinese consumers will suddenly all run out to buy $500 consoles, particularly since PC and mobile gaming is already massively popular there, and a huge black market exists for consoles and games already.

    There hasn’t been an official price announcement yet as to whether the Xbox One will indeed cost the equivalent of $500 USD in China. Though there were a few hints that games themselves might be cheaper than in the rest of the world. They may be sold for about 300 RMB, which would be less than $50 each.

    China is also practically a different planet in terms of market. Microsoft, BesTV and other partners will work together to make new games exclusively aimed at Chinese consumers. One subsidiary, E-Home Entertainment, had their chairman explain what’s to come in terms of game production:

    “Via our cooperation with the world’s leading team, we will continue to develop video games fused with Chinese culture and provide further

  • The company's high-end chips for smartphones also faced increasingly tough competition in China, which led to the reduced profits and revenue in the first quarter.

    Some analysts also suggested Broadcom could sell its struggling mobile and wireless business, which posted an operating loss for the first time since 2009 in the first quarter.

    "Over the past 12 months, [Broadcom's mobile and wireless] revenues declined by 4%, and its operating margins declined by 1,600 basis points to 6%," Jefferies said in a research note. "Management is conceding connectivity share loss in midrange smartphones, and new cellular LTE products won't ramp until the second half of 2014...In the event Broadcom fails in cellular, we would expect them to either divest the business or shut it down."

  • Financial results from Irvine, Calif.-based Broadcom Corp. (Nasdaq:BRCM) remain frustrating. While the company's networking business is performing exceptionally well and the broadband business is also quite solid, the company continues to pay the price for tilting at mobile windmills. Management may be reluctant to turn its back on what looks like potentially billions in mobile/wireless revenue, but ongoing losses from these efforts will likely continue to weigh on a fair value in the mid-$30s.

    Reasonable Results For Q1, But With Caveats

    All told, Broadcom delivered a pretty good quarter. Revenue was down 1% year over year and down 4% sequentially, but still a bit higher than the sell side expected. The devil is in the details, though, as mobile/wireless remains weak (down 15%/down10%) and weigh on good broadband results (up 4%/up 2%) and infrastructure (up 35%/up 1%).

    Margins, too, were better than expected but on the back of good results outside of mobile. Gross margin improved 20 basis points from last year and declined 40 basis points sequentially, but came in about 30 basis points better than expected. Operating income fell by double-digits (down 19% year on year and down 14% quarter over quarter), but was about 14% better than expected. The problem here again was the mix; the margins in networking have become exceptional (around 35%) but the company continues to lose money on its mobile/wireless business.

    Not surprisingly, guidance was also mixed. Revenue for the next quarter was trimmed slightly and margin expectations were raised, but management reduced and pushed out expectations for the mobile business.

  • Broadcom traditionally doesn’t announce products until they’re sampling or shipping but with the goal of investor transparency let me share our plans for the next couple of quarters. Between Q1 and the summer, we expect to have taped out a new family of LTE advanced products. These new products will include five mode support with TDS-CDMA so we can better penetrate the China market. They will also include carrier aggregation and support for at least Cat 6. Our leadership products will enable performance levels not yet announced by others including Cat 7 and Cat 9 and 10, which supports downstream data rates of up to 450 megabits per second and upstream data rates up to 100 megabits per second. SoCs will include multi-core 64 bit processors that clock at least 2 gigahertz, advanced multimedia subsystems and integrated LTE advanced modems. Based on preliminary feedback from customers, we believe these will be truly leading edge products.

    Our job is to deliver these products to customers who are now making design decisions for the next generation of LTE smartphones. Over the next few quarters, we should have greater visibility into the design win momentum that our new products will garner, although one or more key design decisions could be determined in the nearer term. Consistent with what I said at Analyst Day we will continue to monitor progress to milestones to ensure that our cellular investments are on a path to create sustainable shareholder value. I’m proud of what our engineers have accomplished and I believe these forthcoming products will favorably surprise quite a few people.

  • The Renaissance or X Nokia modem team is really, really good team. And I think that we’ve seen a number of things as a result of that acquisition. One is very strong creditability with customers and carriers. This is a team that’s been working on this stuff for decades. These guys invented LTE and so that strength of technical ability and creditability has really helped us in terms of working with carriers, in terms of working with customers. And the team has executed really well. I think everybody was concerned whenever you do acquisition, will the group perform and that acquisition has gone very well. That team executes well and we’ve been able to bond that together the pieces of the Broadcom team to provide the rest of some of those advanced LTE features and fill out the product set. So I am very happy with the engineering team from Renaissance. They’ve done a great job. And I think the strength of these products that we’re coming out with over the next quarters is definitely due to not only the strength we had here at Broadcom but exceptional team at Renaissance. And again I am proud of this guys and the products will probably surprise some people. No one else has yet talked about Cat 7, Cat 9 and Cat 10 products. And so for us to talk about that today shows the confidence we have in able to do advanced LTE products.

    In terms of LTE design wins, we are engaged with multiple customers. We have multiple design wins. And in terms of the progress on our LTE milestones, we think we’re doing quite well on the technical milestones.

    there are a lot of design wins in play right now with key customers and so I think an opportunity for us going forward.

    We do continue to see the business as more backend focused into second half of this year and so we do some design wins ramping there. And I think if those design wins ramp strongly, we should see certainly an improvement on the bottom line. So assuming again we do see that ramp, I’d say definitely we should see some pickup in the second half.

  • So most of that strength will probably at 2015 as some of these new ones you’re alluding to will show up. Thanks for that. And then, a large base of your investors that are holding the stock on the idea that you will exit modems eventually. I know you’ve had lots of those conversations in last say year or so. You talk in general but you want to make profits in any business you’re in and this one’s not doing it now. What timeframe are you looking at to decide whether or not this makes any sense? You had the one business for quite a well now. Are we talking about next for 2014? Are you going for another two years to make a decision whether or not this is going to work or? And is it strictly profits or were you willing to move closer to breakeven if you saw some pull through connectivity and you’re gaining some share there? Thanks.

    Eric Brandt

    We haven’t given a specific timeframe. We’ve instead said that there are some milestones that we put forward that we track and again there are technical milestones, there are customer earned milestones and then there are economic milestones that we look to -- in terms of can we create economic value and shareholder value with these products. And again, that’s no different than for any of rest of our products that we look at that. And certainly right now we believe that there is a tremendous in this business. And if we succeed in getting strong design winds with the products that I mentioned in the conversation, we could have a good business here. If we don’t see customer traction on those products and we don’t find the market attractive, then that would lead us to a different conclusion. So for me it’s very important to see how these products do over the next few quarters and I think that’s what I am looking for in terms of seeing whether we create economic value here. But again, these are pretty interesting products and I wouldn’t second guess them. And on the other hand we’re going to do the right to create shareholder value. We are saying we are going to do what’s rights for our shareholder in the end here.

  • McGregor said that the company has mobile phone chips that will work on the new long-term evolution standard coming to market this year. The success of those products and the economic viability of the unit will determine whether Broadcom continues to invest or shut it down.
    “We don’t do businesses to lose money,” McGregor told analysts on a conference call. “Right now it’s too early to call.”

    Gross margins, a key measure for technology companies, are projected to be in the range of 53.2% to 54.2% for the current quarter, up from 52.2% in the March quarter.
    Spending on research and development is projected to be between $701 million to $721 million, compared to $706 million in the recently ended quarter.

    St loves GM expansion by 1-2 bps. Stock should go up tomorrow.
    If MW is sold, stock could exceed $50.

  • Chip maker Broadcom (BRCM) this afternoon reported Q1 revenue and earnings per share that topped analysts’ estimates, and a forecast for revenue this quarter more or less in line with consensus.

    Revenue in the three months ended in March rose to $1.98 billion, yielding EPS of 51 cents.

    Analysts had been modeling $1.96 billion and 46 cents per share.

    Product gross margin, on an adjusted, non-GAAP basis, was 52.2%, down from last quarter’s 52.6%, but the same as a year earlier.

    CEO Scott McGregor remarked that the company benefitted from “strength in broadband and infrastructure, stronger-than-expected gross margins, and continued operating expense discipline.”

    “In the current quarter, we expect momentum in Infrastructure and Broadband to continue, driven by service provider spending on network build outs and technology upgrades.”

    Further results are available in an investor slide download on the investor relations Web site.

    For the current quarter, the company sees revenue of $2 billion to $2.1 billion, versus consensus for $2.07 billion. Gross product margin on an adjusted basis expected to rise by 0.75 to 1.75 percentage points.

    Broadcom shares are up 11 cents, or 0.4%, at $31.25, in late trading.

  • Advanced Micro Devices Inc. (NYSE: AMD) still is enjoying an ongoing love-hate relationship with Wall Street. While a lack of PC growth is a negative for the company, its specialty chips used in gaming consoles and other devices are well liked and very profitable. It was recently confirmed that soon-to-be released AMD-powered desktops and notebooks will have pre-installed custom BlueStacks Android emulator. This will let customers enjoy the full Android OS experience at no extra charge, and that could be big for the company. The Jefferies price target is set at $5.50. The Thomson/First Call estimate is $4.04. AMD closed Monday at $3.71 a share.

  • Update: The all new Broadcom BCM4354 MIMO 5G WiFi 802.11ac / Bluetooth 4.0 / FM Radio Module has been added as the Combo-Radio Design Win of the Samsung Galaxy S5 Teardown. This is the next evolution of the extremely successful Broadcom BCM43xx series of combo-radios. -- Joel Martin, 4/7/14 3:45pm PT

    Other design wins embraced chips in our Galaxy S5 SMG900H model, including the Skyworks SKY77615 GSM power Amp, the Wolfson WM5110E Audio Hub codec, Maxim’s MAX77804K Power SoC, STMicroelectronics' LPS25H Pressure Sensor, Yamaha’s YAS532B 3-axis electronic compass, and Broadcom’s BCM4753GPS receiver.

  • Possible plans from Apple Inc. (NASDAQ:AAPL) to develop baseband modems are not logical, believes a BMO Capital Markets analyst

    Apple Inc. (NASDAQ:AAPL) is planning to come up with a team to develop baseband modems to be used in iPhones in 2015, says a recent report from Digitimes. However, BMO Capital Markets analyst Tim Long in a report on April 8, 2014, stated that there is a slim chance that Apple would vertically integrate into the baseband. Despite Apple being a “chipset customer” for Qualcomm, Inc. (NASDAQ:QCOM), the analyst believes that there are several reasons why the iPhone maker would not foray into the baseband.

    Qualcomm a big player

    Developing baseband models is not an easy job, believes Long. Intel Corporation (NASDAQ:INTC) and Broadcom have been manufacturing baseband modems for a long time now, and despite that fact, the analyst has not heard any information of “either shipping an LTE modem to the market in meaningful volumes, and each has single digit and falling market share in 3G.” Also, one of the biggest semiconductor companies globally, Samsung, uses its baseband in only one or two of the models of the Galaxy S4, believes the analyst.

    Qualcomm, Inc. (NASDAQ:QCOM) is a big player when it comes to baseband modems. In the December 2013 quarter, the company shipped 213 million baseband modems, which accounted for a 66% share of 3G/4G devices. With such a big scale, it becomes tough for smaller players including merchants or vertically integrated players to compete effectively with Qualcomm, “particularly if CDMA is to be included,” believes the analyst. A similar trend has been noticed in the industry in last few years.

    Apple IPR risk might increase

    Qualcomm, Inc. (NASDAQ:QCOM) along with the product offers “IPR protection,” which is one of the reasons buyers prefer QCOM’s products. Apple Inc. (NASDAQ:AAPL) in the case against Samsung used Qualcomm chipset’s pass through as a defence.

  • By Tiernan Ray
    Bernstein Research chip analyst Stacy Rasgon this morning throws cold water on chatter about Apple (AAPL) possibly developing its own baseband processor instead using chips that Qualcomm (QCOM) sells, parts that dominate the market for wireless connectivity in smartphones.

    As mentioned earlier, DigiTimes this morning had a report citing multiple unnamed sources claiming Apple is building an effort to design its own baseband chips for use in iPhone models coming out in 2015.

    Rasgon, who has an Outperform rating on shares of Qualcomm, and an $85 price target, notes that “Digitimes stories have had a mixed track record in terms of their veracity.”

    This is not as easy as it looks, insists Rasgon. “Broadcom (BRCM) likely invested at least $3B over close to 10 years to develop a viable baseband processor, and had to recently resort to acquisition of the Renesas team to make their 4G products happen.”

    Apple took five years “to move from purchasing merchant solutions to fielding their own fully custom designs” for the iPhone, he notes. “We believe baseband is much more difficult (Qualcomm has pretty definitively proved this).”

    Qualcomm has about 15% of its revenue coming from Apple’s business, he estimated a year ago, and 21% of profits. However, “about 85% of the profit exposure was from licensing (which would be unaffected by any baseband shifts).”

    “We won’t argue the effect on the STOCK should such events turn out to be true, but the actual earnings exposure is not that high.”

    Rasgon sees little economic benefit to Apple in controlling baseband for its devices:

    Let’s assume that AAPL pays $15-$20 for a baseband chip. Given QCOM’s QCT margins (somewhere in the mid-40′s), they might save $5-$10 in gross profit per chip. This would impact the gross margins of their iPhones by perhaps 100 bps or so, non-trivial, but not hugely thesis-changing in a world where the iPhone4 and iPhone5 models saw gross margin compression of ~1000 bps due to higher BOMs.

  • NEW YORK (TheStreet) -- Advanced Micro Devices(AMD_) was gaining 2.3% to $3.97 Tuesday following the announcement of the Radeon R9 295X2, which the chipmaker claims is the "world's fastest graphics card."

    The new graphics card combines two R9 Series GPUs in one card with a closed-loop, pre-assembled liquid cooling system. The two GPUs promises to run many games at maximum settings at 4K resolutions, while the liquid cooling system should keep the card cool and quiet.

    The AMD Radeon R9 295X2 also uses AMD TrueAudio technology to bring virtualized surround sound to any stereo headset.

    "AMD is thrilled to launch the AMD Radeon R9 295X2 graphics card, built on the same award-winning Graphics Core Next (GCN) architecture that powers the gaming industry," Matt Skynner, corporate vice president and general manager, Graphics Business Unit, AMD said in a press release. "This record-shattering dual-GPU card will enable industry-leading audio and visually stunning 4K gaming, proving once again that Radeon is gaming."

    The AMD Radeon R9 295X2 will be available in late April for $1499.

SNPS
41.27-0.48(-1.15%)12:03 PMEDT

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