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t.alex
This is from the perspective of a Wallstreet analyst anyway, isnt it?
dylan.mcgrath
I think it's important to keep in mind here that Berger is really only talking ...
Analyst likes Atmel over TI
Dylan McGrath
8/8/2011 2:04 PM EDT
SAN FRANCISCO—A Wall Street analyst Monday (Aug. 8) upgraded his firm's rating on Atmel Corp.'s stock while simultaneously downgrading Texas Instruments Inc., citing Atmel's broad microcontroller product line and stockpile of cash on hand.
Craig Berger, an analyst with FBR Capital markets, upgraded his firm's rating on Atmel 's stock to "outperform" from "market perform." Berger simultaneously cut his rating on TI's stock to "market perform" from "outperform."
"While some may question the wisdom of exiting a defensive stock like [TI] too soon (before the market decline has ended), we note that [TI] actually is taking on debt to finance its now seemingly expensive National acquisition, making it less 'safe' than it was before," Berger wrote in a report circulated Monday. "Atmel is a relatively 'safe' stock too given its $450M of net cash on hand, no debt, high margins, and improving cash generation abilities."
TI announced in April it would acquire rival National Semiconductor Corp. for about $6.5 billion. The company has subsequently said it has obtained regulatory approval from all countries except China, where the company is still working to secure approval. TI expects the National acquisition to close by the end of the year.
Berger said FBR believes that Atmel's stock will have more upside than TI's once chip stocks move higher early next month. Berger said FBR likes Atmel's broad based microcontroller portfolio, AVR architecture, increasing R&D investments and the market position of its maXTouch line of touch screen controllers.
"We think the firm has technology leadership, and think Atmel can continue to grow maXTouch into a sizable business in coming years as it drives growth beyond smartphones into feature phones, non-Apple tablets, digital cameras, printers, game consoles, industrial applications, white goods and others," Berger wrote. "While touchscreen competition is growing, this should be a sizable and broad-based market."
Berger said FBR remains optimistic about Atmel's ability to grow its 32-bit microcontroller business.
In a separate report, Berger said FBR is not bearish on TI's business or stock prospects, but that believes Atmel's stock offers a better risk/reward proposition.
"We still see some industrial ship-ahead risks for TI and other industrial-exposed chip firms (including Atmel) that could still weigh upon sales and gross margins in 2H11 as take-rates and inventories are adjusted lower," Berger wrote.
FBR maintains a price target for TI's stock of $36 and a price target for Atmel's stock of $17. TI traded at $26.29 Monday afternoon, down 3 percent from Friday's close, while Atmel traded at $9.31, down 5 percent from Friday's close.
Craig Berger, an analyst with FBR Capital markets, upgraded his firm's rating on Atmel 's stock to "outperform" from "market perform." Berger simultaneously cut his rating on TI's stock to "market perform" from "outperform."
"While some may question the wisdom of exiting a defensive stock like [TI] too soon (before the market decline has ended), we note that [TI] actually is taking on debt to finance its now seemingly expensive National acquisition, making it less 'safe' than it was before," Berger wrote in a report circulated Monday. "Atmel is a relatively 'safe' stock too given its $450M of net cash on hand, no debt, high margins, and improving cash generation abilities."
TI announced in April it would acquire rival National Semiconductor Corp. for about $6.5 billion. The company has subsequently said it has obtained regulatory approval from all countries except China, where the company is still working to secure approval. TI expects the National acquisition to close by the end of the year.
Berger said FBR believes that Atmel's stock will have more upside than TI's once chip stocks move higher early next month. Berger said FBR likes Atmel's broad based microcontroller portfolio, AVR architecture, increasing R&D investments and the market position of its maXTouch line of touch screen controllers.
"We think the firm has technology leadership, and think Atmel can continue to grow maXTouch into a sizable business in coming years as it drives growth beyond smartphones into feature phones, non-Apple tablets, digital cameras, printers, game consoles, industrial applications, white goods and others," Berger wrote. "While touchscreen competition is growing, this should be a sizable and broad-based market."
Berger said FBR remains optimistic about Atmel's ability to grow its 32-bit microcontroller business.
In a separate report, Berger said FBR is not bearish on TI's business or stock prospects, but that believes Atmel's stock offers a better risk/reward proposition.
"We still see some industrial ship-ahead risks for TI and other industrial-exposed chip firms (including Atmel) that could still weigh upon sales and gross margins in 2H11 as take-rates and inventories are adjusted lower," Berger wrote.
FBR maintains a price target for TI's stock of $36 and a price target for Atmel's stock of $17. TI traded at $26.29 Monday afternoon, down 3 percent from Friday's close, while Atmel traded at $9.31, down 5 percent from Friday's close.
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Patk0317
8/8/2011 8:30 PM EDT
I'm not sure if I agree with this. Atmel is certainly a good company, but once TI's acquisition of National is complete they are a one stop shop that can offer everything Atmel has and much more.
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Weatherbee
8/8/2011 11:14 PM EDT
Is that a TI shirt?
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yellow1986
8/8/2011 11:23 PM EDT
seems~but I still agree with him~
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ee_guy1234
8/9/2011 3:57 PM EDT
I will leave it to Patk0317 if he wishes to state his affiliation, but it isn't TI past or present.
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goafrit
8/9/2011 6:03 AM EDT
Interesting. How big is Atmel. Can they command price leadership? This is going to become a huge issue.
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KB3001
8/9/2011 9:31 AM EDT
In terms of revenues, we are comparing chalk and cheese here. Atmel's revenues are ~$1.6Bn while TI's are in $14bn region. That said Atmel are very strong in the microcontroller segment. Their business focus and strength in a fast growing market (mobile devices) as well as their sound cash flow mean they are a more attractive investment opportunity than a big company like TI which has been through a costly acquisition. This is a no brainer. That does not mean however that TI prospects are bleak in the long term. As Patk0317 above said, TI has the one-stop-shop advantage.
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Xplain
8/9/2011 8:22 AM EDT
Being an Atmel employee I have to comment on this one. We have products that TI (and others) have tried to copy for some time and given up on, leaving us as the sole supplier. It is not given, that big companies like TI have the necessary skills or knowledge in every team to make market leading products.
Don't ask me about details as I naturally cannot say more.
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david.atkins
8/9/2011 4:22 PM EDT
based support to customers Atmel every time but lets hope the National ethos gets into TO rather than the other way around
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Roger
8/10/2011 7:38 PM EDT
Congrats to Steve Laub, the big maestro of Atmel change !
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Roger
8/10/2011 7:40 PM EDT
BTW , guys like Keith Jackson, Win Rolants and Steve Laub deserve a Harvard case each.
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dylan.mcgrath
8/12/2011 3:21 PM EDT
I think it's important to keep in mind here that Berger is really only talking about the potential for TI and Atmel's stocks to move up. He says clearly that his firm is not bearish on TI, but just thinks that Atmel has more upside right now. Just taking a rough look at the numbers, as of the day the article was published, TI's stock was valued at about 72 percent of Berger's target price, while Atmel's was only about 53 percent of his target price. Assuming that the target price is a good, reachable value for each stock, Atmel obviously has more room to move.
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t.alex
8/14/2011 1:01 AM EDT
This is from the perspective of a Wallstreet analyst anyway, isnt it?
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