TechWeek: Your Little Black Box

Want to know what's really hot at the Consumer Electronics Show in Las Vegas? Just crawl under your desk and touch one of the many black boxes plugged into the power strip.

Yup. It's probably warm. And therein may lie an opportunity, says analyst Andrew Huang of American Technology Research.

Come July 1, he notes, California, one of the world's largest markets for electronics, will require that that power supplies, which are really transformers, operate far more efficiently.

To meet those standards, manufacturers will have to use more analog chips in those boxes, Huang says. One company to watch: Power Integrations(POWI Quote), which supplies high-voltage analog integrated circuits used in power conversion.

The company had a tough spring on Wall Street, suffering four sell-side downgrades, including one by Huang, but it recovered nicely and ended the year 20% to the upside. (ATR does not have an investment-banking business.)

The new law hasn't gotten all that much attention. In fact, when asked if Microsoft's(MSFT Quote) new Xbox 360 complied with it, a company spokeswoman had no idea. After a couple of hours of digging, she reported that Title 20 of the California Code of Regulations does not apply to the console.

That's a good thing, because the need to retool would have been yet another factor delaying Microsoft's shipments, a sensitive subject on Wall Street.

On Wednesday, Goldman Sachs analyst Rich Sherlund published a note saying he believes (the won't company release unit shipments) that Microsoft has delivered only about 1.3 million Xbox 360 consoles in the quarter vs. his earlier estimate of 1.5 million to 1.8 million units. The high-profile analyst backed $400 million out of his quarterly revenue estimate to compensate, but since Microsoft still loses money on each unit shipped, it won't hurt EPS.