Sean Udall is the author of the TechStrat Report, a tech focused newsletter. The following is a free sample. Take a free trial!
The International CES Show
comes with less enthusiasm this year than last, though no less interest. In my view, this year's show, which launches tomorrow in Las Vegas, is even more important. I had called last year the year of the tablet. But I'm typically early. This year we will see even more tablet innovation and likely much more end market interest. This is Microsoft's
(MSFT) last keynote. But it will see some success this year with the new Windows designs. That said, I don't see it making any major inroads against the dynamic duo (Apple
(AAPL) and Google
(GOOG)) and my guess is that its move into tablets might be much more like the Zune than the XBox. I could be wrong, but I don't think so.
For me, this is the year of the Ultrabook. Wth this product, Windows might show a bit more success, but I also think this is going to be a strong platform for Google, for either Chrome or Android or possibly both. I still think an Ultrabook that's dual mode -- tablet and laptop in one -- will be a huge product category that lasts for years and changes computing once again. And this year's CES will feature some of these devices. But the Ultrabook could be the next Monster device category. And, this will be very good for Intel (INTC), Google, and many chip suppliers.
This year will also continue to feature advancements in the ultra-highspeed wireless connected devices which promote my AAAOC (Affordable, Anywhere, Always On, Computing) and bandwidth growth themes. I expect "always on" connectivity will be paired with ever more powerful (and useful) devices that allow one to work more, shop more, video more, map more, game more etc. Ultrabooks will be great vehicles for this movement. Also, the new slate of smartphones are really more like superphones with monumental computing power for the size of the form factor.
Bottom line: My theme for this year's CES is, "The Year of the Ultrabook."
Some additional thoughts:
CES could be a catalyst, and to me the stock chart is forming some early momentum. I still think a major owner (or owners) were forced out of this name in late December, and much of the selling under $35 was structural and not fundamental. Purchases and option exercises in recent days/weeks have me longer in this name than I've been since the late 2009, early 2010 period. And while Qualcomm (QCOM) has been a performance leader for a few months, I still contend that Broadcom will flip this position in the coming days/weeks. That said, no reason to dislike Qualcomm at all as it could have a 35-50% year. Even so, I plan on getting longer here and still feel the stock will trade closer to $50 than $30 within 12 to 18 months, if not quite a bit sooner.
NVIDIA Corporation (NVDA)
Very sleepy stock of late as the vol's have just disappeared on this name. CES provided a big spike for this name last year. In my view, Tegra 3 is stronger and will see more product placement than Tegra 2, and we may see strong evidence of that from CES in the coming days. The fundies have not changed here as Nvidia remains one fo the cheapest if not the cheapest mid/larger cap name in the Semi's.
Corning Inc (GLW)
Gorilla glass or not, this was just the big ugly for most of the second half of 2011. I will note that that Gorilla product was huge and the company's performance metrics were still superb in many ways. The stock is just 30-40% cheaper than it was a year ago... more so after adjusting for net cash. I do think it's worth noting it has another iteration of Gorilla Glass and that product just keeps getting better. And this will be featured at CES.
RF Micro Devices (RFMD)
Guidance implications abound? Or maybe not... in my view, this area of the Semi's had already been hit with numerous pieces of news from peers and RF Micro Devices simply proved it is not immune -- contrary to a few pundit views. The good news is now that most of the names have been hit equally hard and I think we're seeing a bottom and base building in most of these names. Further, this base building is occurring at a time of likely trough inventory levels, versus the usual period of inventory workdowns which cause industry wide stock weakness.
Skyworks Solutions (SWKS) / TriQuint Semiconductor (TQNT)
I think both of these names offer a better setup here than RF Micro Devices, even though I still feel that RF Micro Device's core tech platform and market share position is likely not threatened. Tablets and Ultrabooks will require as much if not more RF-related silicon as the old laptops and early tablet designs. I featured Skyworks as one of my top picks of the year, and the chart is slowly cooperating.
I can't mention all these Ultrabook catalysts without mentioning the creator of them. Intel could show surprisingly strong momentum this year, benefitting from the Ultrabook ramp, the Romley server and possibly better PC end markets after we get through the first or second quarters of the year.
Author holds positions in GOOG, AAPL, BRCM, QCOM, NVDA, GLW, SWKS, TQNT
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