3 Tech Shops Powering Apple, Cisco
NEW YORK (TheStreet) -- Mobile devices, memory and storage are three tech sectors growing at a breakneck pace. ARM Holdings (ARMH) , Netlogic (NETL) - Get Report and Intevac (IVAC) - Get Report are feeding the machine.
ARM Holdings
ARM Holdings, which licenses its technology to chip companies, has a long and expanding reach in the mobile device market. The Cambridge, U.K., chip designer works with low-power, fast-processing systems that are at the core of new devices -- like most smartphones and cutting-edge gadgets like
Apple's
(AAPL) - Get Report
new
.
Samsung
uses ARM-based technology to make Apple's A4 chip, which is designed by
P.A. Semi
, an Apple subsidiary.
Qualcomm
(QCOM) - Get Report
is another customer. Its Snapdragon platform is ARM-based and at the heart of
Google's
(GOOG) - Get Report
phone.
ARM processors are also used in new generation video devices.
STMicro
(STM) - Get Report
licensed ARM's tech for use in TV set-top box chips that process Internet video and digital broadcasts that support 3D viewing.
ARM posted solid fourth quarter numbers Tuesday and guided for a flat or better sales performance in 2010. And though sales fell 10% in 2009, ARM helped offset the drop by signing more licensing agreements. ARM says it also boosted its average chip count to 2.4 per phone, up from 2.1 in the prior quarter. This increase pays off as ARM collects royalties based on it proportion of the phone sales price.
ARM shares were up 7% to $9.62 Tuesday, close to their 52-week high of $9.91.
One potential blemish on ARM's bright canvas: The question of whether or not Apple is required to pay ARM's licensing fees and royalties for its new line of Samsung-made, P.A. Semi-designed chips. The fear is that Apple could put the A4 chip at the center of devices like the next iPhone and additional members of the iPad tablet family. So far, Apple hasn't shared many details about the technology used in the A4.
NetLogic
NetLogic reports fourth quarter numbers after the bell Tuesday, a day ahead of financials due from its big customer,
Cisco
(CSCO) - Get Report
.
NetLogic makes expensive, highly-specialized memory components used in networking devices like routers and switches. The Netlogic chips are crucial to Cisco Internet gear, and likewise, Cisco's demand for network memory chips tends to be the wind in NetLogic's sails.
Investors have been bullish about NetLogic as they try and gauge the improving status of Cisco's business. In November,
Cisco said it was seeing the beginning of an upswing.
But Cisco is a big puzzle with lots of changing pieces. Analysts who have checked the gearmaker's sales channels say there have been some delays in its big switching products. Anytime a big customer has a disruption, the impact can dramatically rattle the supply chain.
Investors who have seen NetLogic shares double over the past year may want to brace for some big dips if Cisco's shipments sputtered.
Intevac
Intevac is also up tonight after the bell with its December earnings. The Santa Clara, Calif.- based tech shop makes manufacturing equipment for the hard drive industry, namely
Seagate
(STX) - Get Report
,
Hitachi
(HIT)
and quite possibly
Western Digital
(WDI)
.
Hard drives have caught on in recent years among consumers as low-priced, standalone storage and backup devices for home networks. The upswing in PC purchases during the holidays has also given the industry a big lift.
Meanwhile, Intevac has booked some big orders, helping to boost investor confidence in the continued momentum of disk drive technology.
But after a 25% jump in the stock so far this year, there's a good cause for concern going in to the earnings and particularly the company's outlook on the year. Given the 200% run up of the stock last year, expectations might be a bit high.
Investors may want to wait until Intevac cools off a bit before they get close.
Intevac shares were up 2% to $14.42 ahead of earnings Tuesday.
-- Reported by Scott Moritz in New York
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