Weekly Tech Update: FFIV, INTC, MU, NVDA, QCOM, TXN

The semiconductor industry has been one of the strongest performing sectors in 2014 driven by the improvement in the PC market, continued strength in personal, network and service provider communications, and increasing electronics adoption in the global markets. However, after leading microcontroller manufacturer, Microchip, pre-announced negatively on account of a fall in demand in China, many semiconductor companies witnessed a decline in their stock price. Three weeks after providing a warning of a possible slowdown in demand, Microchip provided its Q4 2014 guidance which was in line with lowered estimates. The company, which is recognized as a leading indicator of future demand, said it saw most of its inventory correction in Q3 2014 and expects Q4 2014 sales to be just slightly below typical seasonal levels. Chip stock were up strongly after the news.

Below is a weekly update for some of the technology companies that Trefis covers.

See Our Complete Analysis for These Companies Here

F5 Networks

Last week, F5 Networks (NASDAQ:FFIV) announced its Silverline services for hybrid applications to help organizations scale IT resources across dynamic cloud and data center deployments and showcased the F5 synthesis interoperability with VMware solutions at vForum 2014. The company announced that its BIG-IP product portfolio is now certified as a Vblock Ready solution through the VCE Technology Alliance Program (TAP). (Read Press Releases)

F5’s stock price increased marginally (~4%) last week. We recently upgraded our price estimate for the company to $124 (F5 reported its Q4 2014 earnings on Oct 29), which is slightly lower than the current market price of $127 (~ $9.3 billion market cap). We expect the company to witness double digit growth in its revenue for calendar 2014. Our non-GAAP diluted EPS estimate for fiscal year 2014 (ending September) stands at $6.07, as compared to the market consensus of $6.27.

Intel

Leading chipmaker, Intel (NASDAQ:INTC) announced that its global investment organization (Intel Capital) invested $62 million in 16 innovative companies covering a broad spectrum of innovative technologies. (Read Press Release) Intel’s stock traded close to $34 last week. Our valuation of $34 (market cap of $165 billion) for the company is now in line with the current market price. We expect Intel to report revenue of around $53 billion and net income of $11 billion for 2014. We forecast non-GAAP diluted EPS of $2.38, which above the market consensus of $2.18.

Micron Technology

Last week, memory chip manufacturer, Micron Technology (NASDAQ:MU) introduced the industry’s broadest embedded multichip package (MCP) portfolio and expanded its automotive storage solutions portfolio with the introduction of new solid-state drives (SSD). (Read Press Releases) Micron’s stock traded between $32 and $33 last week. Our $32 valuation for Micron is almost in line with the current market price. The company has a market cap of nearly $35 billion. For calendar year 2014, we forecast revenue, net income and diluted non-GAAP net income of approximately $17 billion, $2.4 billion and $3.15, respectively.

Nvidia

Graphics processor manufacturer, Nvidia (NASDAQ:NVDA) announced its Q3 2015 results on November 6. (Read Our Earnings Article) The company in currently on tour to showcase its GRID virtual GPU technology at VMware forums across Asia Pacific. Nvidia’s stock price declined slightly last week, which makes our $19 valuation for the company only marginally lower than the current market price. The company has a market cap of $11 billion. We estimate Nvidia will report revenues of around $4.3 billion and net income in excess of $600 million this year. We forecast a non-GAAP diluted EPS of $1.42 as compared to the market consensus of $1.05. We have yet to update our model for the latest earnings release.

Qualcomm

Leading mobile chipmaker, Qualcomm (NASDAQ:QCOM) reported its Q4 2014 and fiscal 2014 earnings on November 5th. (Read Our Earnings Article) Qualcomm’s stock price declined by more than 10% as its earnings missed Wall Street estimates. Qualcomm’s stock price increased marginally (~5%) last week. Our price estimate of $74 for Qualcomm (market cap of 125 billion) is now marginally above the current market cap of $69 (market cap of $117 billion). We expect the company to report revenue of around $28 billion and net income of $7 billion for calendar year 2014. For fiscal year 2015 (ended September), we forecast non-GAAP diluted EPS of $5.4 as compared to market consensus of $5.23.

Qualcomm’s stock price increased marginally (~5%) last week. Our price estimate of $74 for Qualcomm (market cap of 125 billion) is only slightly below the current market price of $76 (market cap of $129 billion). We expect the company to report revenue of around $28 billion and net income of $7 billion for calendar year 2014. For fiscal year 2014 (ended September), we forecast non-GAAP diluted EPS of $5.14 as compared to market consensus of $5.31. We have yet to update our model for the latest earnings release.

Texas Instruments

Last week, Texas Instruments (NASDAQ:TXN) announced its plan to expand its manufacturing (analog) capacity in Chengdu, China, with a 300mm wafer bumping facility. Additionally, the company expanded its product portfolio by introducing new products for the industrial, analog and IoT markets. (Read Press Releases) TI’s stock price increased to $51. Our valuation of $45 (~ $48 billion market cap) for TI is more than 10% lower than the current market price. We expect the company to report revenue and net income of $13.1 billion and $2.8 billion this year, respectively. Our GAAP diluted EPS forecast for TI stands at $2.59 while the market consensus is at $2.51

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