Picking Tech Earnings Winners and Losers: Applied Materials, HP, Garmin, and More (AMAT, INTC, HPQ, SAP, ORCL, GRMN, OVTI, RMTR, IDCC, DELL, NTEP, ADI)
Earnings season is winding down and a number of key stocks in the tech sector are reporting earnings this week.
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 Q4 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.
Some of the stocks covered include:
Applied Materials (AMAT) – “The short story here is that contract semiconductor fabricators, and some of the larger IDMs like Intel (INTC) and Samsung, are executing aggressive expansion plans focused on pushing process technology down below 30nm. To do that, they will be buying a lot of equipment from Applied Materials.”
Hewlett-Packard (HPQ) – “The most strategically important move that I think Hewlett-Packard could make at this juncture would be to purchase Sap AG (SAP). While SAP is a distant second to Oracle (ORCL) in database software, it is still a very strong and widely used brand, and it would fill what I see as a huge void in Hewlett-Packard’s ecosystem model. Hewlett-Packard also needs to move quickly on its mobile strategy. While purchasing Palm and its WebOS operating system was a huge risk, the operating system is solid and is very well suited for enterprise applications. CIOs around the world are struggling to develop mobile strategies today, and Hewlett-Packard could leverage its already strong position to become the solution of choice.”
Garmin (GRMN) – “When we look at Garmin today, its balance sheet carries $2.2B in net current assets plus long-term investments, plus another $130M in deferred revenue liabilities. In total, this means Garmin’s balance sheet is worth nearly $12.00 a share. If we look at 2011 earnings estimates from the covering analysts, we can see they range from $2.25 to $2.90 with a consensus of $2.57. This is down from the $2.87 Garmin is expected to report for 2010, which itself is down from the $3.53 Garmin reported for 2009. Clearly, the commoditization of GPS technology has weighed on Garmin’s profitability.”
OmniVision Technologies (OVTI) – “While I’m confident OmniVision will report strong results for its January ending quarter, the real speculation here is whether or not it will guide above expectations for the seasonally weak April quarter. If we look at the spread of the estimates from the nine covering analysts that range from $190M to $234.7M, there is anything but consensus.”
Last week, NextInning.com published positive comments on Dell (DELL) and Analog Devices (ADI) and published negative comments on NetApp (NTAP). Last week, Dell rose 11%, Analog Devices rose 5%, and NetApp fell 5%.
In addition, with the market pulling back this week, Next Inning’s call two weeks ago to thin equity exposure and raise cash is looking prescient.
In its earnings previews for the week of February 22nd to 25th, NextInning.com looks at several popular tech stocks still set to report earnings, including Hewlett-Packard, Ramtron International (RMTR), Garmin, InterDigital (IDCC), Applied Materials, and OmniVision.
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