Daily Commentary
Topics for Daily Commentary – May 16, 2012:
- Avian’s morning focus (see more details below):
- • TQNT AVGO: Agreement on pending lawsuit for filter technology is positive for both companies as earlier than expected. Resolution important as high precision filter technology will be increasingly used in upcoming rollout of LTE networks and BAW/FBAR technology is unique to TQNT/AVGO. Financials improve with the elimination of litigation expense ($0.13 for TQNT, approx. $0.05 for AVGO.) Royalty stream to be minimal (although believe TQNT is a net-payer).
- • NVDA: Attended GPU Technology Conference focused on enterprise and high-performance applications of GPUs. Interesting longer term opportunities, but we remain focused on NVDA’s GPU market share gain opportunity vs AMD this product cycle as the primary driver for the stock.
- • ARUN: Reports tomorrow. Our bias is long into the print as the stock has pulled back 30% in 7 weeks (concerns over Europe, enterprise IT spend) and discounts a downward reset to consensus numbers. July Q revenue consensus is $139M, but we think a guide of $136M-$137M will be good enough and we think management will guide there. We are lowering our forward numbers to account for increased macro headwinds. Outside of macro, our checks indicate no change to the fundamental story (oligopolistic market, 20% growth, stable margins, ARUN a share gainer). We are Neutral rated but getting interested as we view ARUN as a quality name to be looking at on the current market pullback.
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