One Last Day of Chip Earnings (BRCM, IDTI, KLAC, MXIM, MCHP, PMCS, RMBS, VSEA)

For those who have felt that this earnings season was one of the more dismal moments for technology, today should mostly mark the end for the semiconductor companies and related stocks.  Not entirely, but mostly.  On deck after the close are Broadcom Corp. (NASDAQ: BRCM), Integrated Device Technology Inc. (NASDAQ: IDTI), KLA-Tencor Corporation (NASDAQ: KLAC), Maxim Integrated Products Inc. (NASDAQ: MXIM), Microchip Technology Inc. (NASDAQ: MCHP), PMC-Sierra Inc. (NASDAQ: PMCS), Rambus Inc. (NASDAQ: RMBS), and Varian Semiconductor Equipment Associates Inc. (NASDAQ: VSEA).

The more important stock in the chip space today is Broadcom Corp.(NASDAQ: BRCM).  First Call has estimates at $0.27 EPS and $1.07billion in revenues.  Estimates for next quarter are $0.17 EPS and$953.14 million in revenues.  We would expect that Broadcom gets a bitmore conservative in its outlook and in the degree it willing to go outon a limb just like its peers have.  First Call has estimates nextquarter as $0.17 EPS and $953.14 million.  Analysts have already backedoff of forward numbers, so the bar is already set low here.  Shares are down 5.5% at $17.30 early in the afternoon, and the 52-weektrading range is $12.98 to $29.91.  A lot of how the reaction will beis likely to key off of how the company signals its own slow down aheadlike its peers are seeing.  Unless Marvell, Qualcomm, TexasInstruments, and other big players have all been sandbagging themselvesjust to avoid the appearance of opulence, then you know that cautionwill likely prevail.

Rambus Inc. (NASDAQ: RMBS) is going to be a very hard one to judge,because traders are going to have to listen to what the company saysabout its recent lawsuit loss and then try to plug in the negatives onhow it will affect earnings in the quarters ahead.  Top top it off,this active and volatile stock has a very limited analyst followingbehind it.  In fact, First Call has no big name firms in the stock.  Itis just a question of how wide losses will be.  This one got killedrecently, and at $9.06 its is in the lower reaches of its $4.95 to$26.41 over the last 52-week trading range.

Integrated Device Technology Inc. (NASDAQ: IDTI) has lost much of itsimportance or at least lost how it impacts the sector.  But it is alsoone of the under the radar players that is expected to remainprofitable.  The maker of mixed-signal semiconductor solutions for thecommunications, computing, and consumer industries is expected to postearnings of $0.14 EPS on $166.6 million in revenues.  For next quarterthe estimates are $0.09 EPS on $148.2 million in revenues.  With sharesdown 6% at $5.48 today, its 52-week trading range is $4.17 to $12.70.

KLA-Tencor Corporation (NASDAQ: KLAC) on the chip equipment and cap-exside of the chip business is almost impossible to get excited aboutwhen you have listened to what every company in the world has saidabout R&D and Cap-ex spending ahead.  First Call has estimates at-$0.01 EPS and $415.6 million in revenues.  And for next quarter,consensus is -$0.07 EPS and $347 million.  The estimates forFiscal-June-2009 are only $0.21 EPS and $1.64 billion in revenues.  Sothe only question is this… "Analysts gone so negative, so whathappens if they ac tually post a profit?"….  As $18.98 this is downabout 60% from last year’s high.

Maxim Integrated Products Inc. (NASDAQ: MXIM) has also been cut in justabout half from last year.  The maker of linear and mixed-signalintegrated circuits is expected to post $0.04 EPS on almost $410million in revenues.  Next quarter estimates are $0.06 EPS and $367.3million in revenues.  This one is deemed as an interchangeable stockwith Linear Tech (NASDAQ: LLTC) as far as traders are concerned.

Microchip Technology Inc. (MCHP) is an interesting one here in thespecialized semiconductor products for various embedded controlapplications.  First Call has estimates at $0.22 EPS on $188.88 millionin revenues.  For the next quarter, targets are $0.17 EPS and $174.5million in revenues.  What is interesting is that this one was raisedat Barclays to an Overweight just in the last day.  So any upside thatis less bad for the coming quarter might be greeted with cheer.  At$18.33, this is at the lower part of the $16.23 to $38.37 range of thelast 52-weeks.

PMC-Sierra Inc. (NASDAQ: PMCS) has also fallen from the importancescale over the years and is only a fraction of the value in the verylate-1990’s.  Estimates for the communications chip provider are $0.08EPS and $119.65 million in revenues.

Varian Semiconductor Equipment Associates Inc. (NASDAQ: VSEA) is beinghit rather hard today with an 11% drop to $18.98.  It too has been cutin more than half this last year.  It is in the semiconductorprocessing equipment used for fabricating integrated circuits.  FirstCall sees a loss at -$0.12 on $107.9 million for this last quarter.  Itis expected to be even lower for the quarter ahead with earnings (well,losses) at -$0.15 EPS on $90.9 million in revenues. 

Keep in mind that some of these estimates may have changed at the lastminute.  All EPS projections are on a non-GAAP basis.  We also did notinclude the "layoff expectations" from each company, but the sad partis that you have to know more layoffs in the sector are coming.  It hasalmost become cool for companies to cut workers, cap-ex, R&D, andcost structures.  Of course hard times call for hard measures, but youget the idea.

Today should mark the apex of chip earnings for this earnings season.

Jon C. Ogg
January 29, 2009