Tuesday, October 28, 2014

Amgen reminder

Just a wee reminder that this column (and my Seeking Alpha columns) can make you money:

Amgen is around $155 as I write.

When I wrote Amgen (AMGN) Initial Buy on March 24, 2014, Amgen was at $121.28

When I wrote Amgen with Onyx Pharmaceuticals: Long Term Analysis September 4, 2013 Amgen was at $113.02.

And Amgen was under $100 before March 28, 2013.

Just as with small cap stocks, even with large cap stocks there can be reasons they get ignored by investors, providing an opportunity to make better-than-index returns if you do your homework and analysis right.

But be careful. While I have done really well with the stocks I own (on a % basis), that is despite occasionally making wrong calls. For instance, AMD and DNDN were risky bets that went awry for me this year.

I own Amgen and AMD stock today. I no longer own DNDN.

You can see all my stock notes & analysis starting at http://www.openicon/confsums/listcos.html

Wednesday, October 22, 2014

Illumina spectacular EPS growth

My analysis of Illumina was published today by Seeking Alpha:

Illumina Sequences Profits

Non-GAAP diluted EPS was $0.77, up 71% y/y.

But buy in at this point? Not my cup of tea. Congratulations to those who already owned ILMN.

You can see all my Illumina notes here.

It is a busy day for me, as is tomorrow. It probably won't be until at least Friday that I can write up an analysis of Intuitive Surgical (ISRG) and Biogen Idec (BIIB). They have something in common, aside from being biotechnology companies: they left an important detail out of their press release. Which is why it is important to listen to analyst conferences and read SEC documents.

Intuitive Surgical had to withdraw its surgical stapler from the market. They gave no details except that there were 3 incidents that led to the stop, and that they are being very conservative in their approach to the issue.

Biogen Idec announced its first Tecfidera (multiple sclerosis therapy) death from PML. This recalls the time in the past when the first deaths associated with Tysabri caused a train wreck. I first bought BIIB at that time, and am glad I did. But is this a buying opportunity? It isn't the same level of train wreck. Watch here or at Seeking Alpha for my analysis.

Tomorrow I am covering quarter reports and analyst conferences by Celgene, Alexion, and Altera. A complete list of the stocks I cover, with links to my notes, is at Openicon.

Tuesday, October 21, 2014

AMD woes and wishes

I had an article published at Seeking Alpha about AMD's third quarter results and prospects:

AMD Seasonality Does Not Imply Failure

You can also see my notes on the Thursday, October 16 AMD analyst conference

AMD remains problematic. The company is the only competitor to Intel and Nvidia, and so keeps them from overcharging consumers. But the benefits to AMD investors have been non-existent for years. I own AMD stock, but it has been a serious drag on my portfolio.

One interesting thing about writing for Seeking Alpha is that AMD is the subject of intense interest there. This has to be because the online community recognizes AMD as one of the two PC CPU makers. So far (5 PM Pacific Time) there are 31 comments on the article. My typical article, which would be far more valuable to investors, gets just 3 to 5 comments. The first commenter is Ashraf Eassa, who I first saw as a Seeking Alpha writer, who had long pushed Intel and bashed AMD, and who graduated (if you can call it that) to be a regular columnist for Motley Fool. All I am saying is, based on a limited sample, that there is no correspondence between the number of comments at Seeking Alpha and the performance of the stock commented on.

This week and next week I will be covering mostly biotechnology stocks. Illumina reported record results yesterday, Intuitive Surgical reported earlier today, tomorrow morning Biogen Idec reports.

Sunday, October 19, 2014

Xilinx Strong EPS growth despite weak revenue growth

So here is the article I wrote for Seeking Alpha:

Xilinx EPS up 27% y/y, But What About the Future? [October 19, 2014 at Seeking Alpha]

Altera (ALTR) will report on Thursday, which should throw some further light on the picture.

You can read my summaries of Xilinx (XLNX) and Altera analyst conferences and quarter reports by following these links:

Xilinx analyst conferences

Altera analyst conferences

These two companies are rivals in the PLD and FPGA semiconductor chip markets.

Friday, October 10, 2014

Microchip Tanks on Preliminary Q3 2014 results

Microchip issued a press release today:


It is not pretty, but I believe the market over-reacted.

First, second quarter fiscal 2015 for Microchip ended September 30, so it is Q3 2014 for the rest of us.

Second, it was a bad quarter only in respect to prior guidance. Microchip has been on a tear this year, and guided to $560.0 million to $575.9 million for revenue.

The preliminary revenue estimate  $546.2 million, which is well below the low end of guidance. But it is up from $492.7 million year-earlier. That is a nearly 11% y/y increase. Part of that increase is from the ISSC acquisition, but even excluding ISSC revenue is $529.3 million, which is up over 7% y/y.

What does it mean? Does this bode ill for the future?

Of course it is hard to say. Microsoft sells microcontrollers and analog chips to a very large number of customers. On a regional basis the demand was worst, compared to expectations, in China. Is there a problem in the Chinese domestic market, or a problem with end demand in Europe or the United States? Or are manufacturers just being cautious? For now, I am leaning to the just being cautious camp, because I believe Europe and China will rebound sooner rather than later. But I could be wrong.

I may even be more optimistic than Steve Sanhi, Microchip's CEO, who stated "We
believe that another industry correction has begun and that this correction will be seen more broadly across the industry in the near future.”

Rather, my guess is any problems are device specific. End markets for microcontrollers include automobiles, medical and industrial equipment. Maybe the sanctions against Russia a backfiring to hit U.S. investors.

After closing yesterday at $45.54, Microchip dropped as low as $39.02 today, but as I write it has recovered to $40.57. Microchip is a strong cash generator and pays a dividend that amounts to over 3.1% at the price I just quoted. It last paid the dividend on September 4.

Microchip has a trailing P/E ratio of 24.7, which is quite reasonable even taking into account the newly announced, slower annual growth rate.

I don't like it when a stock I own goes down, or misses guidance, but Microchip has a great long-term track record, so I see no point to selling my holdings. It will be interesting to see if the bulk of the semiconductor industry is seeing the same pain, or if it is specific to Microchip. It is very possible that demand in Q4 will make up for any slack in demand in Q3.

Wednesday, October 8, 2014

Bought more AMD

Just to note that I bought more AMD. I bought the same number of share I sold on 7/16 for $4.72 for $3.23. AMD reports on the 16th and I'll report on that at www.openicon.com/confsums/amd_main.html.

I believe AMD is a risky stock, but that sales of chips for Xbox and PlayStation should keep it going until its new lines of chips for servers becomes available in 2015. On the downside recently AMD is lowering prices on its graphics card chips (during the crucial holiday season) due to a new cycle of competition from Nvidia, which will likely continue until AMD releases its next round of graphics chips.

AMD represents roughly 3% of my tiny portfolio today. My largest holding is Gilead Sciences (GILD), which has broken my portfolio rules and now is about 15% of my portfolio, but I am holding it anyway in anticipation of  rapid further appreciation.