Following reports last week Apple (AAPL) surpassed Research in Motion (RIMM) and Motorola Mobility (MMI) in U.S. cell phone sales, and has achieved 5% of global sales, for fourth place, Canaccord Genuity analyst Mike Walkley today writes that the company should be able to scoop up not only smartphone volume share in coming years but also a bigger slice of the profits.

Walkley reiterated a Buy recommendation on Apple shares and a $480 price target.

Walkley notes that Apple had second place in global smartphone sales in Q1, based on shipments of 18.7 million units, or almost 19% of the global smartphone volume, ahead of RIM, at 14.9%, and Samsung (SSNLF), at 12.6%, and behind Nokia (NOK), at 24%.

“We anticipate further declines [at Nokia] over the next several quarters as Nokia undergoes a platform transition,” writes Walkley, referring to the company’s drop from 34% of smartphone units last year, but also, more important, a drop in Nokia’s share of smartphone operating profit from 19% in Q4 of last year to 13% in Q1.

Apple’s share of profit rose from 43% in Q4 to 50% in Q1, putting it at the top of the heap. RIM’s share of operating profit was unchanged at 16%.

“Given’ RIM’s pre-announcement this past Thursday combined with our skepticism regarding QNX and RIM’s ability to launch competitive ‘super phones’ during 2012,” he writes, “we believe RIM’s value share will continue to fall during the next several years.”

Walkley doesn’t offer a specific target for how much Apple’s share may rise from the current 50%. However, he does project Apple’s global smartphone unit shipment share rising to 17.2% next year from what he projects will be 16.9% for the full-year 2011. That will bring Apple closer to what may be just 19.2% for Nokia by the end of 2012. RIM’s unit share of smartphones may decline to 12.7% by that time, he thinks.

Apple will be vying with growth at Samsung and HTC in smartphone units: Samsung may see its share rise from 13.9% this year to 15% next year, while HTC may jump from 11.6% this year to 12.9% in 2012.

Apple shares this afternoon are down $3.33, or 1%, at $346.80.

Article courtesy of Tech Trader Daily

As I noted in the previous post, Seagate’s (STX) deal today to take over the disk-drive operations of Samsung (SSNLF) is brightening the economic outlook of the business for both Seagate and Western Digital (WDC), who will now split 90% or so of drive shipments, an effective duopoloy, with Toshiba’s (6502.JP) 10% share now seeming ever more vulnerable.

And the deal promises some resolution of the constant flash-vs.-disc debate that has raged.

Robert Cihra with Caris & Co. tells me in a phone call this afternoon that the importance of NAND was at the heart of this deal.

“I don’t think they would have paid as much as they did if it weren’t for their ability to secure NAND supply from Samsung,” says Cihra. In fact, the effect of this tie-up is to diminish a long-standing fear among investors that flash would push out traditional rotating magnetic drives completely.

“Flash or hard drive? The reality is that you can paint a picture where it’s both,” Cihra tells me today.

“Certainly flash grows faster than hard drives over the long term, but it actually plays a role within the roadmap of hard drives,” given that the two technologies can be combined in hybrid drives, something Seagate has long been “quite vocal” about, Cihra notes.

What does it do for the stocks? Being a cyclical business, drive maker stocks have long had low valuation multiples in the tech universe. Seagate shares currently fetch about 8.5 times fiscal 2012′s projected earnings.

Cihra doesn’t see the multiple expanding much, because the threat that flash will dissipate the value of Seagate and Western’s drive expertise will still be there to some extent, for the foreseeable future.

But the outlook for profitability should be higher. Analysts are expecting about $2 per share in earnings in Seagate’s fiscal year ending next June. But that will probably turn out better, Cihra thinks, given what will now be much better economics in the drive business.

Seagate management said this morning the Samsung deal should add to earnings within the first year following the closing.

And Toshiba? “They’ve been the lowest-value-add in the entire drive industry,” Cihra tells me, especially given that Toshiba mostly sells to the distribution channel, with little direct OEM business.

Toshiba doesn’t make its own discs or drive heads, he observes, putting them at a disadvantage to Seagate and Western.

“I think they should just shut it down,” Cihra says of Toshiba’s drive business. “But I’ve thought that for a decade now.”

Article courtesy of Tech Trader Daily

Shares of Seagate (STX) are down 61 cents, or 3.4%, at $17.23 following this morning’s announcement the company will take over the disk-drive operations of Samsung (SSNLF) and that Samsung will take 10% ownership in Seagate, in a $1.38 billion deal split 50-50 cash and stock.

The deal confirmed speculation by The Wall Street Journal on Sunday.

In conjunction with the announcement, Seagate said that its fiscal Q3 ended in March delivered earnings per share of 25 cents, 2 cents below Street estimates, while revenue of $2.69 billion, up 12%, year over year, was in line with consensus. The forecast for fiscal Q4 was for revenue of $2.7 billion and EPS of 19 cents to 23 cents. The Street has been looking for $2.6 billion in revenue and 28 cents EPS.

During a conference call with analysts this morning, Seagate management said that the situation in Japan following the earthquake last month continues to be “volatile,” and that as a result, Seagate is planning for the drive industry to see sales fall in the June quarter. Seagate’s operating expenses, however, will come in at the same level as the March quarter, weighing on profits.

Aaron Rakers with Stifel Nicolaus thinks the deal is positive, he tells me in a phone call this morning, as it continues the consolidation of the drive market to three competitors who own the vast majority of industry, with Seagate, Western Digital (WDC) and Japan’s Toshiba (6502.jp).

“It’ll lead to more rational behavior from a gross margin standpoint,” notes Rakers. “Plus, there’s a whole 3.5-inch drive category Toshiba doesn’t even play in,” notes Rakers.

Rakers sees the deal as also validating the importance of solid-state drive technology. The agreement calls for Samsung to supply flash memory chips to Seagate for the latter’s flash-based drives, and for Seagate to ship solid-state drives to Samsung for use in its computers.

I would note that flash-memory drive supplier Stec (STEC) is up on the news today, rising 24 cents, or 1.3%, to $18.45.

Article courtesy of Tech Trader Daily

RBS chip analyst Didier Scemama today reiterates a Buy rating on shares of chip maker ST Microelectronics (STM), following up on the iFixit tear-down analysis of the new Samsung (SSNLF) Galaxy S 4G phone.

That examination confirms ST won the contract to provide the GPS chip for the phone, pushing out Broadcom (BRCM). That was a surprise to Scemama, who writes that he had thought ST Micro’s involvement was limited to providing the baseband chip for the device’s HSPA+ connectivity.

While the baseband modem is a $15 part for ST, he estimates, the GPS chip ads an extra $2.50 per device. Samsung was ST Micro’s largest customer last year, he believes, bringing in 44% of sales, or $969 million.

The extra chips may offset declining business from Nokia (NOK), the second largest customer for ST Micro. If ST Micro can sell 16 million to 20 million units of its U8500, it could offset the drop in revenue as Nokia winds down its Symbian phone line, he writes.

Scemama has a price target of €10.50 on the ordinary shares of ST Micro traded in Europe, which rose 1.8% today to €9.20.

ST Micro’s American Depository Receipts today closed up 21 cents, or 1.7%, at $12.73.

Correction: A prior version of this post suggested ST Micro would need to see sales of 16 million to 20 million units of the Samsung Galaxy S. However, Scemama was referring to total sales of the U8500 chipset from ST Micro, not the sales he expects for the Galaxy S.

Article courtesy of Tech Trader Daily

In a note to clients today, JMP Securities analyst Alex Guana reiterated a Market Underperform rating on shares of Broadcom (BRCM) and following two recent announcements by Nokia (NOK) and Samsung (SSNLF), both major customers, that threaten Broadcom’s growth, in his view.
Gauna writes that it’s likely Qualcomm will end up [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Enterprise cloud storage provider Box.net is launching a new version of its software that includes a new front-facing interface built from scratch and additional mobile features, the company announced today.

The new Box.net interface is a mash-up of micro-blogging activity streams like FriendFeed and online storage like Dropbox. Box users can drag and drop files from their computer directly onto the site to send files into cloud storage. There are also folders that are synched up directly with the cloud, like Dropbox, that automatically update files as they are changed.

Users can preview those files directly within Box.net — and the software supports a lot of file formats. Box developer Kim Lockhart showed off the capabilities by opening up Adobe Illustrator files within the web interface and previewing other files from Photoshop and the like. Whenever any file is viewed, commented on or changed, Box.net users get an update on their activity feed.

“This basically kills the software problem,” Lockhart said. “You can view files like illustrator files and pretty much anything else as we move forward without ever having to have the software.”

The idea was to remake the front-facing application from scratch because it was becoming too complicated with too many features. Box.net released a new update just about every week last year and added more and more features, and that was clouding up the service and making it too complicated for some end users, said Box.net CEO Aaron Levie. While Box is mainly focused on the enterprise, Levie said Box had plenty of potential in the consumer space — to compete with cloud storage providers like Dropbox and the like.

The new version of the cloud storage service will also include an app marketplace that includes other cloud-based applications, like NetSuite and Salesforce, that can sync up with Box.net. The idea is to spread the applications virally by including notifications of co-workers adding applications and using them in each activity stream. Box.net is also expanding its relationships with VMWare, NetSuite and other companies to ramp up those applications.

Throughout the presentation, one Box.net employee in the crowd was adding photos and documents on the cloud storage provider’s demonstration account to show off the new mobile. Box.net wants to focus on tablets — specifically Android tablets — in the future after seeing some pretty decent success on the iPad, Levie said. The Box.net application was downloaded more than 250,000 times on the iPad. But the company launched the Android application in the fourth quarter last year and already has 70,000 downloads. Samsung is working with Samsung specifically on to further develop its application on Android tablets like the Samsung Galaxy Tab.

“The iPad really opened up the enterprise’s eyes with what was possible with mobile computing and tablet computing,” Levie said. “It’s not just about email, web applications, it’s actually about getting rich business tools on mobile devices.”

The software will roll out to Box.net’s customers over the next 30 days and launching today. For the first month, users can switch back and forth between the new and old interface. But after a certain period of time, only the new user interface will be available for Box.net users.

Tags: Android, cloud storage, enterprise cloud computing, enterprise storage, iPhone operating system

Companies: Box.net

People: Aaron Levie

Article courtesy of VentureBeat » deals

A month and a half after Microsoft (MSFT) put on sale its Windows Phone 7 phones, built by a number of manufacturers, including HTC, Samsung (SSNLF), LG Electronics (LGERF), and Dell (DELL), the company has shipped 1.5 million of the devices, CNet’s Bonnie Cha writes today.
The shipments are “in line” [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Nvidia’s (NVDA) “Tegra” chip, number 2, is gaining popularity among tablet computer makers, with Acer, Asustek, Toshiba and Samsung all using the part in upcoming tablets, according to a report this morning in DigiTimes by Monica Chen and Joseph Tsai, citing notebook computer industry sources.
Chen and Tsai write that the [...]

Article courtesy of BARRONS.com: Tech Trader Daily

The numbers for U.S. cellular handset market share in the third quarter are in from comScore this afternoon: Out of 234 million Americans age 13 and up, Samsung (SSNLF) was the top device maker, with 24.2% share of all mobile subscribers, up 1 percentage point from the July-ending Q2.
LG Electronics [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Lenovo Group is planning to launch a tablet computer called LePad in the U.S. next year, CEO Yang Yuanqing told the Wall Street Journal. The device joins other new tablets from Dell (DELL), Samsung, Research In Motion (RIMM) and others that are taking on the Apple (AAPL) iPad.
He also said [...]

Article courtesy of BARRONS.com: Tech Trader Daily