Will Mobile Semi Stocks Show Upside in this Mediocre Recovery Cycle? An Exclusive Interview with Sector Expert Doug Freedman

Wall Street Transcript

67 WALL STREET, New York - June 5, 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, Equity Analysts and Money Managers. 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: China Mobile Limited (CHL), Broadcom Corp. (BRCM), Marvell Technology Group Ltd. (MRVL), SanDisk Corp. (SNDK), Micron Technology Inc. (MU), Apple Inc. (AAPL), Intel Corporation (INTC), NVIDIA Corporation (NVDA), Texas Instruments Inc. (TXN), Analog Devices Inc. (ADI), Altera Corp. (ALTR) and many others.

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

TWST: So that's Broadcom. What other top picks can you recommend right now, and what do you like about each of those stocks?

Mr. Freedman: Avago would be a name that I talk to investors frequently on. It's actually been an underperformer because of the handset transition going on over at Apple (AAPL) where they are - Apple in the past has been about a 20% customer for them. And the weakness at Apple is well-known, and investors are very afraid of what impact that's going to have on the second-quarter earnings from Avago.

They are an off-quarter company. So they will have a July quarter-end for their Q2, and that could start to see the uptick of the next phone introduction out of Apple. Longer term, the thesis on Avago relates to their exposure to LTE-based handsets, and I view them as a company that will win an increasing amount of content as the market moves to bring LTE to the mainstream phone volumes.

TWST: Is there another stock that you can mention?

Mr. Freedman: Another name I think looks very inexpensive is Marvell (MRVL). They are actually more exposed to the PC and storage ecosystem. When I look at Marvell, they are managing a transition from disk drive to solid state disk drives. When we go to solid state disk drives, they get more content, so they get to sell more dollars of semiconductors into a solid state drive than they do from a more traditional disk drive, a hard disk drive.

They also have a wireless business that they have been funding that is not contributing to earnings. If anything, it's probably a significant drag to the present cash flow at the company. And with or without the drag of wireless, the company's cash flow in my opinion is very undervalued. And their balance sheet is being used to continue to buy back a significant amount of company's stock.

TWST: What is the level of investor interest in the semiconductor sector at the moment? And is investor sentiment largely in line with your assessment of opportunities in the sector? To what extent does it diverge?

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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