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Archive for the ‘Orchid/Onion’ Category

Onion of the Day – Qualcomm (QCOM)

April 8th, 2014 No comments

News

-Digitimes is reporting Apple is looking to build their own baseband chips for the iPhone and is hiring an R&D team for that purpose.

Apple reportedly plans to form a R&D team to develop baseband processors for use in iPhones to be released in 2015 and will place the baseband chip orders with Samsung Electronics and Globalfoundries, according to industry sources.

Apple currently purchases baseband chips from Qualcomm, which then produces the chips at Taiwan Semiconductor Manufacturing Company (TSMC), indicated the sources, adding that Qualcomm and TSMC will be affected if Apple decides to develop baseband chips in house.

Why is it bad news for Qualcomm?

-Qualcomm dominates the baseband chip business with over 50% market-share and has Apple as one of its biggest customers. If Apple brings this in-house, it would be severely detrimental to Qualcomm’s financial performance. Remember Apple has done this before with the P.A. Semi acquisition to make ARM CPUs in-house.

-Digitimes says Qualcomm has over 50% market-share of the $16-19 billion annual baseband chip business ($8.75B of annual Qualcomm sales at mid-point using the 50%). Strategy Analytics says Qualcomm has 66% market-share of the baseband business. The consensus street estimate for Qualcomm revenue in FY2014 is $26.8B.

Categories: Orchid/Onion

Orchid of the Day–AutoNation (AN)

April 2nd, 2014 No comments

News
-AutoNation CEO went on CNBC and was extremely bullish on current sales trends and his confidence on auto sales for the rest of the year

”happy to declare the epic winter of 2013 officially over”
business in the last 10 days of March was simply phenomenal..that follows 10 weeks of (low showroom traffic)”
”going forward..16 million will be achieved..confirmation consumer is coming out of hibernation..will probably have a very strong spring market”
now say confidently the industry will break through 16 million for the year”

Why is it good news for AutoNation?
-Confidence in good business trends and a recent up-turn inflection point in the business is positive for AutoNation fundamentals

Categories: Orchid/Onion

Onion of the Day – Rackspace (RAX)

March 25th, 2014 No comments

News
-Google announces massive new cloud price cuts from a 32% price cut across the board, a 68% price cut on storage, and a 85% price cut on queries Link

Why is it bad news for Rackspace?
-Large price cuts by cloud competitors significantly pressure Rackspace cloud business margins

-New York Times: “Prices would continue to fall roughly in line with Moore’s Law, Mr. Hölzle said” Link 

This quote above means Google intends to keep pricing very low going forward

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h/t @Colin_Sebastian

Categories: Orchid/Onion