Earnings season is upon us in the tech sector. What should investors expect from these reports? What are the key storylines to follow and are these stocks likely to trade higher or lower in the wake of their results?
In NextInning.com's earnings previews, available free to trial subscribers, key storylines are evaluated, analyst expectations are audited, and in depth valuation analyses are provided to develop fair value ranges for dozens of stocks. Next Inning's model portfolio has returned 216% since 2002, nearly four times the return of the S&P 500.
In its latest earnings preview, Next Inning looks at several popular stocks, including Fusion-io (FIO), Corning (GLW), Intersil (ISIL), Silicon Laboratories (SLAB), Tellabs (TLAB), Teradyne (TER), Triquint Semiconductor (TQNT), Applied Micro Circuits (AMCC), Avnet (AVT), Benchmark Electronics (BHE), KLA-Tencor (KLAC), Maxim Integrated Products (MXIM), Power Integrations (POWI) and Taiwan Semiconductor (TSM).
Here is just a tiny sample of what Editor Paul McWilliams wrote about Fusion-IO:
"I think what we're seeing today in the Solid State Drive (SSD) market is the second phase of a long term transition where NAND Flash-based memory devices (inclusive of SSDs) facilitate the introduction of new types of storage devices as well as take share from legacy storage technologies - specifically, Hard Disk Drives (HDD). You can read about the primary drivers for this transition in enterprise applications (Data Center et al) in a special report titled, "Emerging Memory Technologies in the Data Center." This is an important report for investors interested in SSD and rank reduction DRAM suppliers.
"In the first phase of this transition companies like STEC Inc. (STEC) introduced classical SSDs that were manufactured in the same form-factor as a traditional HDD. This meant companies like EMC, which was STEC's largest customer, could simply plug the drives into the same slots it had for HDDs, and with some software work substantially increase system performance and lower system level power consumption in one fell swoop.
"I caught this trend early and suggested STEC as a good speculative investment when the stock was trading in single digits, and then suggested exiting later in the $30s for a quick profit of about 250%. There were several successful swing trade calls following this, however, since my thesis going in was there was little to no chance for STEC or, for that matter, anyone else developing durable
differentiation, it was easy to reap some profits while market participants debated that point before finally arriving at a similar conclusion. Now that the market has arrived at this conclusion, STEC again trades for single digits. I suggested selling SSD supplier OCZ Technology Group (OCZ) in March 2011 when it moved above $8.
"As I noted above, STEC is a good example of the first phase of the longer term transition. As I noted in the report linked above, in follow on phases we would see the NAND Flash memory devices move closer to the processor and, while doing that, shed the unnecessary HDD form-factor. In this phase, Fusion-IO has established itself as the market leader.
"As is all too often the case, the price of Fusion-IO sailed above sustainable levels shortly after its IPO last year. This was fueled by a Barron's article that predicted Fusion-IO would be one of the top performing stocks in 2012. Ahead of the calendar Q3 2011 earnings report that was behind Barron's prediction and the spike above $40 we saw during the fall of 2011, I predicted we would see Fusion-IO rally and suggested that would mark a good time to sell the stock."
With Fusion-IO shares still well off those highs, McWilliams' earnings preview identifies whether it's now time to buy or sell.
The Next Inning model portfolio is up 216% since its inception versus 58% for the S&P 500. Click here to start your free 21-day trial membership to Next Inning Technology Research and get McWilliams' in depth reports, earnings previews, and real-time trade alerts.
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