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Update
Intel Corporation (INTC: $18.37) 1/Buy
Monday, August 30, 2010 Price Target: new: $26; old: $30
52 Week Range
MARKET DATA
$18.12-$24.37
Lowers 3Q10 Guidance On US/Euro Consumer PC
ADT - 3 month 71.3 Weakness; Maintain 1/Buy W/EPS Cuts Fully Priced In.
Market Cap (Bill) $102.28
Shares Out 5,568 Summary and Recommendation
Float 5,562 Friday INTC resolved five weeks of PC-related outlook controversy by lowering its
3Q10 revenue guidance to +2.0% qq from +7.8% on US and European consumer
EARNINGS DATA
weakness. The negative revision nonetheless has multiple pluses: a) a cloud of
Earnings Per Share (FD Operating)
uncertainty overhanging shares is removed, b) inventory is in good shape as 2006-8
FY-Dec FY09A FY10E FY11E
efficiencies keep output well-tuned to demand, c) gross margins are surprisingly
1Q $0.11 $0.43 $0.43
2Q ($0.07) $0.51 $0.41
resilient at 66.0%, and d) further out in 2011 and 2012 there should ~$8B+ per yr in
3Q $0.33 $0.51 $0.49 excess cash thrown off – intensive buy-back action makes sense. Overall, our C10E
4Q $0.40 $0.52 $0.56 and C11E EPS pull back 18.3% and 19.4% to $1.97 and $1.90, with lower ests and
FY $0.78 $1.97 $1.90 multiples taking our target to $26. Investment risks are choppy catalysts into 1Q11 and
Prior EPS NA $2.15 $2.37 further macro/demand deterioration. Pluses are new product mojo in 2H10/2011
EV/EBITDA 8.4x 4.3x 3.8x w/Sandy Bridge sustaining favorable price/mix, stellar low-to-mid-60’s gross margins
PE 23.6x 9.3x 9.7x thru 2011 (unheard of 9+ months ago), and near-historic low 9.3-9.7x P/E valuations
EV/Sales 2.9x 2.0x 1.7x and a 3.4% dividend yield making shares compelling for value-oriented investors.
FINRA SIPC
For full disclosure, please see end of report 1
Semiconductors
INTC’s 3Q10 Outlook Revision Is A Negative, Though Is Not Without Its Silver Linings
• Revises 3Q Guidance – Friday intra-day INTC lowered its C3Q10 forecast, resolving the PC-segment outlook
dissonance we’ve identified since early-August (8/3 “Semiconductor Sector Update - Cash Piling Up At A
Prodigious Pace”). New 3Q10 parameters are $11.0B +/-$200M revenues (+2%; from +7.8% $11.6B +/-$400M),
66.0% gross margin (from 67.0%; favorable mix partially offsets lower volume) and unchanged opex vs prior. Caris
estimates move to $11.0B (+2.4%)/$0.51 from $11.7B (+8.8%)/$0.58 vs Street of $11.5B (+7.0%)/$0.53.
• US, European Consumer Demand The Culprit. Our checks show INTC is seeing weak US and European
consumer PC demand which is more than offsetting planned and realized strength in Enterprise PC’s and x86
servers and workstations. For context, respective US, Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) is
5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7% - abundantly positive in every geography both quarters.
• But Multiple Silver Linings Emerge. We see three things: a) the 2006-8 efficiency improvements are keeping fab
production in-tune with output, mitigating excess inventory risk and 4Q10 utilization concerns, b) gross margins
remain elevated at surprisingly stellar levels and should stay north of 60% through C11, and c) a cloud of
uncertainty is now gone and investors will no longer worry about a 4Q10 pull-in to meet 3Q10- guidance. US,
Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) 5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7%.
• Yearly Outlook Revisions – We trim our 4Q10 forecast to add further conservatism to our model. Caris C10
estimates move to $43.45B (+23.7%)/$1.98 from $45.06B (+28.3%)/$2.16 (Street $44.66B (+27.1%)/$2.05) while
C11 moderates to $44.52B (+2.5%)/$1.91 from $48.44B (+7.5%)/$2.38 (Street $47.02B (+5.3%)/$2.09).
2
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
Data Center Is Holding Up Well, Led By Nahalem Server. That Said, Comments From NR CSCO, As Well As
Eroding Macro Data Points Since June, Lend Concern Regarding Late-2010 and 2011 Enterprise Spending Strength.
$2,500 40.0%
30.0%
$2,000
20.0%
$1,500
10.0%
$1,000
0.0%
$500 -10.0%
$0 -20.0%
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10E
We Are Bullish On X86 Share Gain Prospects In The Server Market And In INTC’s Leadership Position (See 3/25
“Server Biz Under-Appreciated”).
Figure 4: Annual Server Revenues By Architecture, YY Dollar Growth, and Percent of Total Market 1997-2010E
2003-8 Up-cycle
Server Market 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E Avg Avg *
RISC/Unix $23,893 $24,578 $25,393 $29,010 $22,094 $18,735 $17,755 $16,254 $16,335 $16,533 $16,860 $17,228 $13,054 $13,054 $16,827 $19,777
x86 (Windows, Linux $13,486 $14,212 $16,904 $19,668 $16,438 $16,082 $18,172 $22,485 $25,485 $26,419 $28,805 $27,444 $23,484 $27,007 $24,802 $19,474
Mainframe/Other $23,098 $20,425 $15,201 $12,786 $11,584 $9,485 $10,234 $10,749 $9,814 $9,851 $8,874 $8,554 $6,624 $6,491 $9,679 $15,053
Total $60,477 $59,215 $57,498 $61,464 $50,116 $44,302 $46,161 $49,044 $51,634 $52,803 $54,539 $53,226 $43,162 $46,552 $51,235 $54,255
YY Dollar Growth
RISC/Unix $3,503 $685 $815 $3,617 ($6,916) ($3,359) ($980) ($1,501) $81 $198 $327 $368 ($4,174) $0 ($251) $391
x86 (Windows, Linux $4,185 $725 $2,693 $2,764 ($3,230) ($356) $2,091 $4,313 $3,000 $934 $2,386 ($1,361) ($3,960) $3,523 $1,894 $2,541
Mainframe/Other ($4,132) ($2,672) ($5,225) ($2,415) ($1,202) ($2,099) $748 $515 ($935) $37 ($977) ($320) ($1,930) ($132) ($155) ($1,580)
Total Growth $3,556 ($1,262) ($1,717) $3,966 ($11,348) ($5,814) $1,859 $2,883 $2,590 $1,169 $1,736 ($1,313) ($10,064) $3,390 $1,487 $1,352
YY % Growth
RISC/Unix 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%
x86 (Windows, Linux 45.0% 5.4% 18.9% 16.4% -16.4% -2.2% 13.0% 23.7% 13.3% 3.7% 9.0% -4.7% -14.4% 15.0% 9.7% 16.5%
Mainframe/Other 38.8% 7.5% 21.8% 9.5% 2.0% 9.4% 8.8% 17.5% 8.1% 1.4% 5.7% -2.3% 4.5% 7.1% 6.5% 13.7%
Total 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%
% Of Total
RISC/Unix 39.5% 41.5% 44.2% 47.2% 44.1% 42.3% 38.5% 33.1% 31.6% 31.3% 30.9% 32.4% 30.2% 28.0% 33.0% 36.3%
x86 (Windows, Linux 22.3% 24.0% 29.4% 32.0% 32.8% 36.3% 39.4% 45.8% 49.4% 50.0% 52.8% 51.6% 54.4% 58.0% 48.2% 36.6%
Mainframe/Other 38.2% 34.5% 26.4% 20.8% 23.1% 21.4% 22.2% 21.9% 19.0% 18.7% 16.3% 16.1% 15.3% 13.9% 19.0% 27.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.2% 100.1%
% of Total BPS Change
RISC/Unix 369 200 266 304 -311 -180 -383 -532 -150 -33 -40 145 -212 -220 -165 -38
x86 (Windows, Linux 596 170 540 260 80 350 307 648 351 68 278 -125 285 360 254 370
Mainframe/Other -965 -370 -806 -564 231 -170 76 -25 -291 -35 -239 -20 -72 -140 -89 -332
* 1996-1999 and 2003-2007
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
3
Semiconductors
Developed Country PC Client Weakness (Europe, US), Which More Than Offsets Solid Corporate PC Trends, Is The
Source Of INTC’s Miss. We Model 3.0% 4Q10 Growth Versus ~7.1% Seasonality.
$5,000 15.0%
10.0%
$4,000
5.0%
$3,000 0.0%
$2,000 -5.0%
-10.0%
$1,000
-15.0%
$0 -20.0%
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10E
40.0%
30.0%
20.0%
10.0%
0.0%
Sep-10E
Mar-04
Jun-04
Dec-04
Mar-05
Jun-05
Dec-05
Mar-06
Jun-06
Dec-06
Mar-07
Jun-07
Dec-07
Mar-08
Jun-08
Dec-08
Mar-09
Jun-09
Dec-09
Mar-10
Jun-10
Dec-10
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
-10.0%
-20.0%
Mobile MPU Revenue Dollar % change
-30.0%
Taiwanese NB Revs (5-yr seasonality past Jun-10)
Taiwanese NB Revs (75% of 5-yr seasonality)
Source: Caris and Company, Company Reports, Taiwanese NB companies – Asustek, Quanta, Compal, Wistron, Inventec, Acer
Figure 7: Quarterly INTC Revenues in Desktop and Server Versus Taiwan Motherboard ODM’s
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Sep-10E
Jun-04
Dec-04
Mar-05
Jun-05
Dec-05
Mar-06
Jun-06
Dec-06
Mar-07
Jun-07
Dec-07
Mar-08
Jun-08
Dec-08
Mar-09
Jun-09
Dec-09
Mar-10
Jun-10
Dec-10
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
-5.0%
-10.0%
-15.0%
-20.0%
-25.0% INTC DC Revenue Dollar change
Taiw anese MB Revs (5-yr seasonality past Jun-10)
Taiw anese MB Revs (75% of 5-yr seasonality)
Source: Caris and Company, Company Reports, Taiwanese MB companies –Elite, AsRock, MSI, Gigabyte
4
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
Structural Profitability Improvement Under CEO Otellini and CFO Smith (Efficiency, Product Development, Mix)
Are Visible In Just A 100 BPS Hit To Gross Margin Despite A 550 BPS Revenue Growth Guide-Down. Historic Stock
Price and Gross Margin Relationships Beg A Big Leg Up In The Shares, Though Macro Concerns Must Ease For
Shares To Rally Sustainably.
$20 55
$15
50
$10
45
$5
$0 40
Jan-02
May-02
Jan-03
May-03
Jan-04
May-04
Jan-05
May-05
Jan-06
May-06
Jan-07
May-07
Jan-08
May-08
Jan-09
May-09
Jan-10
May-10
Jan-11
May-11
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Price (left) GM (right)
Figure 9: Volume/Cost and ASP’s Have Upside Potential To Caris C10E Modeling
15.0%
10.0%
5.0%
0.0%
C02 C03 C04 C05 C06 C07 C08 C09 C10
-5.0%
-10.0%
-15.0%
CPU (volume/cost) Underutiliozation charges Fab start-up Chipset unit costs
Inventory writeoffs/reversals CPU ASPs NAND/NOR/Other (legal) GMs
Source: Caris and Company, Company Reports. Change is based on sequential variance from prior 4Q levels.
Figure 10: INTC Quarterly Revenues vs Caris and Street Gross Margins, 2007-2011E
$14,000 70%
$13,000
65%
$12,000
60%
$11,000
$10,000 55%
$9,000
50%
$8,000
45%
$7,000
$6,000 40%
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
5
Semiconductors
We Are Confident INTC’s Improved Supply Chain Practices Will Preclude Major On-Hand Inventory Build In
C3Q10. That Said, We Do Not Expect Inventory To Track Normal Seasonality Which Would Be Down QQ.
Figure 11: INTC Inventory Percent Of Sales and Inventory Dollars By Quarter
$5,000 60%
$4,500
50%
$4,000
$3,500 40%
$3,000
$2,500 30%
$2,000
20%
$1,500
$1,000 10%
0 0 0 0 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 0 0
0
r- -0 -0 -0 0
r- -0 -0 -0 0 -0 -0 -0 0 -0 -0 -0 0- -0 -0 -0 0
- -0 -0 -0 0 -0 -0 -0 0- -0 -0 -0 0
- -0 -0 -0 0 -0 -0 -0 1 -1
a n p c a n p c r-a n p c r-
a n p ce ra n p ce ra n p c r-
a n p ce ra n p ce ra n p ce r-
a n p c r-
a n
u e e u e e u e e u e u e u e e u e u e u e u e e u
M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J
Inventory Inventory % of Sales Linear (Inventory % of Sales)
Source: Company Reports and Caris and Company
$4,500 100
$4,000 90
80
$3,500
70
$3,000
60
$2,500
50
$2,000 40
$1,500 30
$1,000 20
Mar-00
Jun-00
Dec-00
Mar-01
Jun-01
Dec-01
Mar-02
Jun-02
Dec-02
Mar-03
Jun-03
Dec-03
Mar-04
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Dec-04
Mar-05
Jun-05
Dec-05
Mar-06
Jun-06
Dec-06
Mar-07
Jun-07
Dec-07
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Jun-08
Dec-08
Mar-09
Jun-09
Dec-09
Mar-10
Jun-10
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Figure 13, 14: INTC Historic Inventory Seasonality In Dollars (Left) and Days (Right)
Inventory Seasonality Inventory Seasonality
Dollars 1Q 2Q 3Q 4Q Days 1Q 2Q 3Q 4Q
5-yr Avg Chg ('07) 169.0 174.4 -67.6 -57.0 5-yr Avg Chg ('07) 7.2 3.4 -6.6 -2.3
5-yr Avg % Chg ('07) 5.7% 5.6% -1.2% -0.3% 5-yr Avg % Chg ('07) 10.5% 4.0% -6.8% -1.3%
7-yr Avg Chg ('07) 211.9 153.0 -119.6 -84.0 7-yr Avg Chg ('07) 8.0 2.8 -7.3 -2.8
7-yr Avg % Chg ('07) 8.1% 5.1% -3.4% -2.0% 7-yr Avg % Chg ('07) 12.1% 3.3% -8.1% -2.6%
Eight-Year Min 2,164.0 2,152.0 2,225.0 2,253.0 Eight-Year Min 61.0 58.7 60.4 56.7
Eight-Year Max 4,366.0 4,332.0 4,477.0 4,314.0 Eight-Year Max 90.1 103.0 91.9 88.6
Current/Projected 51.0 359.0 -9.3 Current/Projected 0.5 14.2 -5.4
% change qq 1.7% 12.0% -0.3% % change qq 0.6% 19.6% -6.2%
Source: Company Reports and Caris and Company
6
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
C4Q10’s Cash Balance Should Be ~$15B Even After The Net $7.0B For MFE (Not Yet In Our Model), Leaving INTC
With Ample Buy-Back And Deal Flexibility, Especially In Light Of Careful Cap Ex Spend. In Addition, The Business
Should Spin Off ~$8B in Excess Cash Per Year In 2011 and 2012 - We Think Aggressive Buy-Backs Make Sense With
Mid-To-Large Strategic Deals Out Of The Way By The End Of 2010.
Figure 15: F10E and F11E FCF Is ~2.5x The Trailing 9-Year Average
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E FY11E
($5,000)
($10,000)
$7,500
$7,000 25%
$6,500
$6,000 20%
$5,500
$5,000 15%
$4,500
$4,000 10%
$3,500
$3,000 5%
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
7
Semiconductors
Em plo ym e nt
26-Aug Weekly jobless claims fell by 31k to 473k but four-week average rose by 3k to 487k + -
19-Aug Weekly jobless claims rose by 12,000 to 500,000 , highest level in 9 months - -
11-Aug U.S. job openings of 2.9 mil flat in Jun, but hire rate 3.3% down from 3.5% in May - -
5-Aug Private sectors added 42k jobs in July, payroll up by 90k, joblessness up to 9.6% - -
5-Jul US private payrolls increased by 83,000, joblessness fell to 9.5% as 625,000 workers let the workforce - +
1-Jul ISM Em ployment index fell 2.0 points in June to 57.8 but is still 4.0 points above 1Q10 average levels - +
7-Jun Private payrolls up just 41,000 in May, down sharply from April's 218,000 increase - +
Context: Payrolls are 5.4% below December, 2007 highs, the biggest-ever post-war drop
C o ns um e r
13-Aug Consum er confidence 69.6 in July from 67.8 in June + +
30-Jul 2Q10 Consumer spending +1.6%, down from +1.8% in 1Q10 -
16-Jul Consum er confidence fell to 66.5 from 76.0 in July from June versus expectations for 74.5 -
Context: Confidence at lowest level in 11 months; income and job prospects extraordinarily week
Ho us ing
25-Aug New home sales for Jul -12.4% to 276k annualized, a record low since 1963 - -
27-Jul New home sales for June +12.1%, revised from the previous estimate 23.6%
14-Jul Mortgage Bankers Ass'n Home Purchase Applications Index fell 2.9% for wk to lowest level since 1996 - ->
30-Jun Mortgage Bankers Ass'n Home Purchase Applications Index fell 3.3% for wk ended June 25 to 13-yr low - -
Funds flo w
30-Jul June stock fund flow -$5.41B vs bond fund flow of +$20.7B (source: ICI) - -
Context: YT D Stock inflows +$8.9B, Bond inflows +$144.7B
30-Jun US stock fund inflows fell $24.7B in May after increasinng in January through April (source: ICI) -
Ot he r
16-Aug Empire State business conditions index increases to 7.1 from 5.8 (8.0 expected)
14-Jul June retail sales fell 0.5% after May's 1.1% decline - +
5-Jun May US retail sales up 2.5% versus 2.7% expected - +
Europe
13-Aug Euro-Zone annualized 2Q10 GDP +1.7%; Germany 2Q10 GDP +3.7% + +
22-Jul Euro-Zone PMI rose to 56.0 in July from 55.5 in June, above expectations of 55.0 +
Asia & RO W
16-Aug Japan annualized 2Q10 GDP growth 0.4% (2.4% expected) - -
8
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
Avg $6,038 14.8 17.9 187.0 15.3 10.5 19.4 17.3 21.1 12.6 10.7 3.1 2.9 3.0 2.1 1.9 7.5% 8.0% 6.5% 8.0% 11.1%
Represents Caris and Street Consensus EPS includes Stock Option Expenses for ADI, LLTC, MCHP, MXIM, NSM, and ONNN. For ISIL and SMTC, Caris and Street Consensus excludes Stock Option Expenses
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
9
Semiconductors
PC and Graphics
AMD 15% -60% 134% 48% 39% -33% -69% -62% 307% 0% -15% -15% -47% 27% 28% 46% 71% -4% -21% -37% -17% -6% 52% -41% -4% -11% 3% 7%
INTC 7% -49% 94% -27% 7% -15% 7% -33% 34% -8% -1% -16% -12% -1% 10% 18% 4% 9% -13% -10% -6% -4% 3% -25% -9% 1% 1% 6%
NVDA 308% -82% 88% 0% 58% 103% 22% -71% 114% -37% -33% -28% -4% 9% 19% 33% 24% -7% -41% -46% -1% 8% 17% -47% 5% 315% -17% 27%
avg 110% -63% 105% 7% 35% 18% -13% -55% 152% -15% -16% -19% -21% 12% 19% 33% 33% -1% -25% -31% -8% -1% 24% -37% -3% 101% -4% 14%
PLD
ALTR -19% -42% 84% -9% -10% 6% -2% -14% 35% -5% 12% 0% -19% 5% -7% 26% 10% 7% 2% 13% 3% 2% 41% -12% 3% -3% -4% 11%
XLNX -15% -47% 88% -23% -15% -6% -8% -19% 41% 9% 6% -7% -24% 8% 7% 14% 7% 2% -1% -1% -1% 0% 20% -15% 5% -11% -8% 14%
avg -17% -45% 86% -16% -13% 0% -5% -16% 38% 2% 9% -4% -22% 6% 0% 20% 9% 5% 1% 6% 1% 1% 30% -14% 4% -7% -6% 12%
Memory
MU -13% -67% 36% -10% 8% 5% -54% -56% 272% 6% -15% -23% -36% 36% 31% 62% 29% -2% -18% -35% -20% -6% 12% -40% 3% 1% -9% -16%
SIMO 32% 12% -87% 49% -21% 2% -68% -51% 21% 31% 9% -14% 31% 16% 45% -4% 4% 88% -24% 21% 14% 3% -13%
SNDK -48% 41% 201% -18% 152% -32% -22% -71% 202% -32% -19% 8% -51% 33% 15% 48% 34% 19% 21% 18% -19% -18% 106% -32% 4% 15% 23% -5%
STEC -24% 2% 99% -24% -18% 236% -31% -51% 284% -29% 66% -25% -45% 73% 215% 27% -44% -27% 5% -28% -6% -6% 24% -72% 21% -7% 42% 21%
avg -28% -8% 112% -17% 47% 60% -24% -66% 202% -19% 9% -27% -46% 41% 73% 36% 1% 6% 6% 0% -12% -7% 57% -42% 12% 4% 16% 0%
Sector
Avg 12% -48% 121% -9% 19% 8% 2% -45% 111% -15% 13% -15% -32% 17% 35% 24% 8% 3% -11% -9% -2% 2% 26% -26% 8% 8% -3% 10%
Sector
Median -13% -50% 97% -17% 7% -5% -2% -43% 78% -17% 7% -15% -29% 13% 26% 21% 7% 0% -13% -15% -1% 2% 17% -25% 4% -5% -7% 8%
SOX -9% -45% 76% -15% 11% -2% -12% -48% 70% -16% 6% -3% -40% 10% 13% 22% 77% 45% -9% -11% -3% 0% 12% -20% 3% -4% -8% 8%
SPX -13% -23% 26% 9% 3% 14% 4% -39% 23% -10% -3% -9% -23% -13% 16% 16% 25% 3% -12% -5% 3% -1% 7% -13% 0% 1% -2% 6%
10
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
Buy
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
105 64.81% 0 0.00%
Hold/Neutral
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
53 32.72% 2 3.77%
Sell
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
4 2.47% 0 0.00%
First Call ratings are adapted to the above chart as follows: 1 & 2 = Buy, 3 = Hold/Neutral, 4 & 5 = Sell
*Note: Caris & Company utilizes the First Call rating system when assigning ratings in equity research reports. The following is a list of
each numerical rating and its respective definition.
1 Buy
2 Above Average
3 Average
4 Below Average
5 Sell
Unless otherwise noted, stock prices reflected herein are the closing price through the business day immediately preceding the date of this report.
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
11
Semiconductors
Analog Devices Inc. (ADI-US) High:38.96 Atheros Communications Inc. (ATHR-US) High:43.90
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 15.29 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 11.26
USD Last: 28.81 USD Last: 25.92
45 50
AVERAGE - AVERAGE - ABOVE AVG - ABOVE AVG - AVERAGE -
BUY - $35.00 BUY - $23.50 BUY - $32.00 BUY - $50.00
$38.00 $32.00 $26.00 $34.00 $14.00
AVERAGE - BUY - $34.00
BUY - $34.00 AVERAGE -
$35.00 BUY - $31.00 45
$34.00
40
AVERAGE - AVERAGE -
$33.00 $17.00
40
35
35
30
30
25
25
20
20
15
15
10
10 5
160 60
55
140
50
120 45
40
100
35
80 30
25
60
20
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
35
24
22
30
ABOVE AVG - 20
$29.00
25
18
16
20
14
15
12
10 10
2,600
400
2,400
350 2,200
2,000
300
1,800
250 1,600
1,400
200
1,200
150 1,000
800
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
Intersil Corp. (Cl A) (ISIL-US) High:35.00 Linear Technology Corp. (LLTC-US) High:37.77
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 7.18 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 17.69
USD Last: 10.43 USD Last: 29.54
40 40
ABOVE AVG - ABOVE AVG - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
$36.00 $13.00 $16.00 $14.00 $35.00 $25.00 $29.00 $33.00
ABOVE AVG - ABOVE AVG - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
$30.00 $14.00 $12.50 $33.00 $24.00 $30.00
35
AVERAGE -
$13.50
35
30
30
25
20
25
15
20
10
5 15
220
100
200
90
180
80 160
140
70
120
60
100
50 80
40 60
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
12
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
Microchip Technology Inc. (MCHP-US) High:41.37 Marvell Technology Group Ltd. (MRVL-US) High:22.87
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 16.23 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 4.48
USD Last: 29.11 USD Last: 14.75
45 25
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $26.00 BUY - $32.00 BUY - $34.00
$14.00 $13.00 $16.00 $24.00
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $27.00
$19.00 $10.00 $21.00 $22.00
BUY - $31.00 40
20
35
15
30
25
10
20
15
10 0
120 400
110
350
100
90 300
80
250
70
60
200
50
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
Maxim Integrated Products Inc. (MXIM-US) High:32.40 NetLogic Microsystems Inc. (NETL-US) High:35.00
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 10.72 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 7.21
USD Last: 17.01 USD Last: 24.37
35 40
AVERAGE - AVERAGE - AVERAGE - ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $45.00 BUY - $56.00
$15.50 $18.00 $19.00 $32.00 $46.00 $33.00 $25.00
BUY - $39.00
AVERAGE - ABOVE AVG - ABOVE AVG - BUY - $35.00
$18.00 $34.00 $20.00
35
AVERAGE - BUY - $30.00
30
$19.00
30
25
25
20
20
15
15
10
10
5 5
200
50
180
45
160
40
140
35
120
100 30
80 25
60 20
40 15
20 10
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
35
30
30
25
25
20
20
15
15
10
10
5
5 0
50 550
45 500
40 450
35 400
30 350
25
300
20
250
15
200
10
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
13
Semiconductors
10 18
8 16
6 14
4 12
2 10
0 8
300
280 40
260 35
240
30
220
200 25
180 20
160
15
140
120 10
100
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
Silicon Laboratories Inc. (SLAB-US) High:53.17 Skyworks Solutions Inc. (SWKS-US) High:19.29
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 17.05 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 3.57
USD Last: 39.60 USD Last: 17.49
55 22
BUY - $50.00 BUY - $11.30 BUY - $19.00
BUY - $17.00
ABOVE AVG - BUY - $59.00 BUY - $24.00
$40.00 BUY - $55.00 BUY - $14.00 20
50
BUY - $41.00
BUY - $47.00
18
45
16
40
14
35 12
10
30
25
20
4
15 2
180
30 160
140
25
120
20 100
80
15
60
10
40
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
14
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Semiconductors
30
40
25
30
20
20
15
10
0 10
350 600
550
300
500
250 450
400
200
350
150 300
250
100 200
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
25
20
15
10
18
16
14
12
10
8
6
4
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
15
Semiconductors
Analyst Certification
The analyst responsible for the content of this publication, Craig Ellis, hereby certifies that the views expressed in this publication
regarding the company or companies and their securities accurately represent that analyst’s personal views, and that no direct or indirect
compensation is to be received by the analyst for any specific recommendation or views contained in this note.
The research analyst and/or research associate responsible for this report has received or will receive compensation based on various
factors, including quality of research, investor client feedback, and the Firm's overall revenues, but not based on investment banking
revenues.
This information is not intended to be used as the primary basis for investment decisions. The information contained herein shall not be
construed as an offer, or the solicitation of an offer to buy or sell any securities, products, or services. Because of individual client risk and
return requirements and client investment constraints, this material should not be construed as advice designed to meet the particular needs
of any investor. CRIS accepts no liability whatsoever for loss or damage of any sort arising out of use of all or part of this publication.
This material is based on data obtained from sources considered to be reliable. Caris & Company (CRIS) makes every effort to use reliable,
comprehensive information, however, we make no representation that it is accurate or complete and it should not be relied upon as such.
Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not
be realized. Any opinions expressed herein are subject to change and CRIS disclaims any obligation to advise you of any such change.
The securities described herein may not be eligible for sale in all jurisdictions, or to any particular investors. Options, derivative products,
and futures involve risk, and are not suitable for all investors. CRIS, its affiliates, their respective directors, officers, employees, or
members of their families may have long or short positions in, and buy or sell, the equities or issues referred to herein, or options thereon.
Neither the author of this report nor a member of his or her household maintains a position in the securities mentioned in this report.
The firm has not provided any investment banking services for the companies mentioned in this report.
Neither this report, nor any portion thereof may be reprinted, sold, or redistributed without the express written consent of Caris &
Company, Inc.
16
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
Director of Research
Craig A. Ellis 415 489 2514
NEW YORK
cellis@cariscompany.com
500 Fifth Avenue
Suite 1640 Consumer
New York, NY 10110 Media & Entertainment
(866) 99-CARIS T oll Free David Miller 213 802 1648
(917) 464-1600 dmiller@cariscompany.com
(917) 464-1520 Fax
Specialty Retail
info@cariscompany.com
Dorothy Lakner 917 464 1564
dlakner@cariscompany,com
SAN FRANCISCO Household Products, Personal Care & Toys
Linda Bolton Weiser 917 464 1604
44 Montgomery lweiser@cariscompany.com
Suite 1500
San Francisco, CA 94104
Energy
(415) 489-2500
info@cariscompany.com
Oil & Gas, Refiners
Ann Kohler 917 464 1608
akohler@cariscompany.com
DEL MAR
Healthcare
853 Camino Del Mar Specialty Pharmaceuticals
Suite 100 James Molloy 617 728 0712
Del Mar, CA 92014 jmolloy@cariscompany.com
(877) 99-CARIS T oll Free
Specialty Pharma & BioPharma
(858) 704-0300
(858) 704-0320 Fax
Mario Corso 617 728 4906
info@cariscompany.com mcorso@cariscompany.com
Devices & Diagnostics
Paul K. Choi 917 464 1602
BOST ON pchoi@cariscompany.com
Healthcare IT
50 Milk Street
Leo Carpio 917 464 1605
21st Floor
lcarpio@cariscompany.com
Boston, MA 02109
(617) 728-0700 Healthcare Services
(617) 728-0715 Fax Ann Hynes 617 728 0713
info@cariscompany.com ahynes@cariscompany.com
Technology
Semiconductors
Craig A. Ellis 415 489 2514
cellis@cariscompany.com
Semiconductor Capital Equipment
Ben Pang 415 489 2522
bpang@cariscompany.com
Enterprise Software
Curtis Shauger, CFA 415 489 2517
cshauger@cariscompany.com
Hardware
Robert Cihra 917 464 1610
rcihra@cariscompany.com
Internet & Software
Sandeep Aggarwal 415 489 2518
saggarwal@cariscompany.com
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
17