Analog Semiconductors Penetrate Automotive and Medical End Markets: A Wall Street Transcript Interview with Tore Svanberg, Analyst at Stifel, Nicolaus & Co., Inc.

Wall Street Transcript

67 WALL STREET, New York - May 30, 2013 - The Wall Street Transcript has just published its Semiconductors Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Semiconductor Capital Equipment - Cloud Computing, Mobile Device Consumer Demand - Semiconductor Inventory Burnoff - Improvement from Cyclical Bottom - Semiconductor Capital Equipment Spending - New Computing Platform Demand

Companies include: Microchip Technology Inc. (MCHP), Texas Instruments Inc. (TXN), Silicon Laboratories, Inc. (SLAB), Volterra Semiconductor Corpora (VLTR), Linear Technology Corp. (LLTC), Intersil Corp. (ISIL), Monolithic Power Systems Inc. (MPWR), Exar Corp. (EXAR), Hittite Microwave Corporation (HITT), Broadcom Corp. (BRCM) and many more.

In the following excerpt from the Semiconductors Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You cover a number of stocks. Which are your four favorite ideas for 2013, and what do you like about each?

Mr. Svanberg: When we started 2013, I basically came out with recommendations based on investment styles, so if you look at those four names, each one represents a different style of investing. So our favorite value idea is Intersil (ISIL). Our favorite growth pick is a company called Monolithic Power Systems (MPWR). Our favorite turnaround stock is Exar (EXAR). And then finally, our favorite core investment - this is sort of the best-of-breed fundamental, where fundamentals are strong - idea is Hittite (HITT).

Let's start with Intersil. So this is a company that's been around for more than 20 years as an independent company. It's traditionally an analog company, very diversified, has built IT and technology over a long period of time. I would say that the company has struggled the last three, four years mainly due to execution, potentially mismanagement, but clearly it's a company that has struggled, revenues have declined every year over the last three years.

That said, they do generate very healthy profitability; they generate good cash flow, so they actually pay a very healthy dividend, and the dividend yield is right now 6.3%, and to me that's probably among the highest dividend yields in this space. So then the question is: How sustainable is this dividend? Well, when I look at, again, at the company's balance sheet, I think they are in a very strong position to continue to pay the dividend. Not only that, but they also very recently hired a new CEO who I think is going to make some changes internally that will serve as catalyst. So I think, as an investor, you can patiently wait for these changes and still be rewarded with a 6.3% dividend.

In the case of Monolithic Power Systems, this is our favorite growth idea. This is a company that used to be one of the fastest...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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