Taiwan Semiconductor Price Targets

Symbol: TSM, Taiwan Semiconductor

Intelligent Investor Strength: 8
Chart Strength: 7
Speculation and Greed Strength: 10

RawGreed Strength Rating: 8.75

Target Buy Price: under $8
Target Sell price: $10 within 3-6 months, $11-$13 in 6 months-1 year.

Notes: I remain bullish on TSM and it’s prospects during the next consumer electronics cycle, which will bring 720p HDTV, HD-DVD, Blue-Ray, new gaming consoles and a host of new undeveloped technologies that will follow in suit.

*Disclaimer: I own 4598 shares of TSM at an average purchase price of $9.02

The ATI Conundrum

I’ve come up with some speculation about ATI’s recent manufacturing difficulties. For those of you who don’t know, TSM, Taiwan Semiconductor is the manufacturer for both ATI and Nvidia. This presents quite a difficult situation for both companies since they are both in bed with the same manufacturer. It’s seems that in the last generation battle between the two graphics card makers, Nvidia had manufacturing delays with their top of the line 6800 cards, resulting in little more than a paper launch, while ATI enjoyed robust availability of its X800 line of cards. In a cat and mouse battle between the two companies, the current generation graphics card battle has panned out just the opposite. Nvidia is enjoying robust availability of it’s 7800 line of cards while ATI is falling behind due to manufacturing delays with its X1800 line. It is speculated that TSM devoted more of it’s QA, Quality Assurance, to Nvidia this round due to complaints made by Nvidia over the manufacturing of its 6800 line. Other financial analysts and websites have speculated that the delay in ATI’s current X1800 cards came from the company’s choice to use a 90nm manufacturing process down from its previous use of 120nm. The smaller you get the more difficult it is to fabricate these GPU’s.

The thing that strikes me as odd though is TSM’s open announcement of excellent yields on the XBOX 360 GPU also designed by ATI and also using the same 90nm manufacturing process. TSM is notoriously stringent on its QA process and ATI must have found it strange that the same 90nm process resulted in excellent yield’s for the XBOX 360 GPU. I believe neither company likes the idea of being tied to the same manufacturer. If I was in ATI’s shoes what would I do? Incase any of you missed it, ATI made a quiet announcement that UMC, the worlds number 2 outsourced fabricator, will be manufacturing its lowest end line of X1800 GPU’s also based on a 90nm process. I believe this is in part of a longer term strategy by ATI to move away from using TSM as their sole manufacturer or at the very least to put additional pressure on TSM to devote additional resources to ATI. The theory seems to be reflected in TSM’s and ATI’s stock price which have both taken an unusually high price drop. Greedy short sellers have pushed the stock price of TSM and ATYT further down. For now ATI is faced with the issue of manufacturing with the same foundry partner as Nvidia.

Setting up to buy ADBE

ADBE, Adobe Systems Incorporated (ASI) offers a line of software and services for public and private sectors worldwide. It operates through four segments: Creative Professional, Digital Imaging and Video (DIV), Intelligent Documents, and OEM PostScript and Other (OPO). Adobe is famous for providing industry standard software products for the graphic design industry worldwide. Their products include Adobe Photoshop, Adobe Illustrator and ownership over the PDF system. Adobe is in the process of acquiring Macromedia to strengthen its product portfolio. By acquiring Macromedia, Abobe has basically created a digital design monopoly that spans between traditional print and online design. The market has reacted adversely to Adobe’s acquisition sending the stock price down. I think short term speculation over the Department of Justices approval of the acquisition will send Adobe’s stock price down further. Adobe and Macromedia’s products enjoy little overlap. Macromedia is well known for its Flash software products, Dreamweaver and backend software tools. Long term Adobe faces no competition.

I see two situations panning out.
If Adobe’s acquisition fails, I see the stock going back to low 30′s.
If Adobe’s acquisition goes through, the company will have created a larger monopoly over a portion of the design industry.

At today’s prices it appears that investors will win either way. My target buy price for ADBE is $25. My target sell price for ADBE is $40 in 6-12 months and $50 within 1-2 years.

Watching Coca Cola Enterprises

Stock Symbol: CCE, Coca Cola Enterprises

CCE, Coca-Cola Enterprises, Inc. engages in the manufacture, distribution, sale, and marketing of nonalcoholic beverages primarily under agreements with The Coca-Cola Company. I’m starting to look at CCE as its trading near its 1 year low. Softdrink consumption growth is stagnant, but stable. The long term risk to CCE would be if softdrink consumption losses share to other “health” products, PBG, Pepsi Bottling Group or if there was a major change in consumption attitudes. I think speculation and short sellers are likely to blame for the rapid drop in price. I would look towards buying CCE at any price under $19 as a value. I expect a return to $22-$23 as new marketing campaigns are introduced. I would like to buy CCE if it trades at $18.70 or lower next week. If I add CCE to my portfolio i’ll report back with my recommendation and indepth analysis.

Lucent Technologies

Stock Symbol: LU, Lucent Technologies

Intelligent Investor Strength: 8
Chart Strength: 5
Speculation and Greed Strength: 10

RawGreed Strength Rating: 8.25

Target Buy Price: under $2.90
Target Sell price: $4.50-$5 within 6-12 months, $5-6 1-2 years.

*Disclaimer: I own 8000 shares of LU purchased at an average price of $2.96.

Nortel Networks Corporation

Symbol: NT, Nortel Networks Corporation

Intelligent Investor Strength: 9
Chart Strength: 5
Speculation and Greed Strength: 10

RawGreed Strength Rating: 8.5

Target Buy Price: under $3
Target Sell price: $5 within 6-12 months, $7-8 within 1-2 years.

*Disclaimer: I own 9000 shares of NT purchased at an average price of $2.58.

Mary Meeker Queen of the Net?

I wonder why they let analysts like Mary Meeker, who was once proclaimed the Queen of the Net, continue to publish bullish reports that outline long term strategies when their records are less than stellar.

Here is a quote from a business week article:

Morgan Stanley (MWD) analyst Mary Meeker explained why she is bullish on the Internet and China in an interview with BusinessWeek, published Friday. “Is information in China as widely available as in the U.S.?” she asked during an interview. “No. Is information more widely available in China today than it was five years ago? Absolutely. What’s the reason for that? The Internet.”

The analyst said she is excited about China’s Internet market because “it’s the combination of one of the biggest markets in the world with the biggest evolution agents. We have defined it as an emerging market meeting an emerging market.”

While the BusinessWeek interview had Meeker praising several U.S.-based Internet companies as major beneficiaries of China’s march to the Web, she identified one Chinese firm, Tencent, as a potential winner. The Shanghai-based company offers an advanced instant-messaging application.

Meeker recently completed a study of Internet-related opportunities in China. Read the report.

Here’s some information on Mary’s previous performance:

Mary became famous for her predictions on Amazon and Priceline. Too bad her predictions only go one way. She failed to correctly advise clients in December 2000 to get out of .com stocks. Meanwhile the 11 stocks she rated “outperform” were down 83 percent. Morgan Stanley was the underwriter for 8 out of the 11 stocks Mary recommended.

It seems odd to me how quickly people forget articles like Fortune Magazines – Where Mary Meeker Went Wrong. I wonder how anyone could trust her research or recommendations again.

This sounds like a case of extreme greed. Why would anyone trust her long term predictions on China if her track record was an abysmal 83 percent down by the end of the .com bull run. That’s no long term strategy to me. That sounds like a short term method to capitalize on greed in China. The government should pass some kind of law to protect the general public from misleading research if an analyst’s performance drops below a certain threshold. This would be such a beneficial law, if the analyst’s research is widespread enough to be read by the general public.

FBR Greed

Greed is in action on FBR, Friedman, Billings, Ramsey Group Inc. The stock is tanking with no news out. Someone is out to short.

Look for sub $10 prices as buying opportunities.

SIRI? Wow what a rise…

I’ve been following SIRI Sirius Satellite Radio, Inc. since the stock was priced below $2 a share. The stock has since risen as high as $9.43. The company has been burning cash now for months and is operating at a huge negative cash flow.

$175 Million for Howard Stern?
$300 to acquire each new customer?

This reminds me of the .com days. Sure the potential market is huge, but the amount of cash SIRI is spending is out of control. The company says it expects to be profitable by the 4th quarter of 2006 or early 2007. I say that’s a pretty big risk and aggressive time frame. It definitely rings a .com bell or two. Analysts, of course, are writing whatever they can to substantiate the stock price.

If you ask me what I think about SIRI price going up so high from $2-9, I say greed. My prediction is that the stock will drop down to around $6, maybe as low as $5 before rebounding past $10 as the company spends more cash and announces positive subscriber growth. I would short SIRI at prices past $10 if the situation happens.

*Disclaimer I shorted 2000 shares of SIRI at $7.31 per share.

TSM Short Sellers

The short sellers were out in full effect today on TSM, Taiwan Semiconductor. TSM is the company behind the production of the chips that power the Sony Playstation 3 and the Microsoft X-BOX 360. Utilization has been up for the last few quarters and the company has raised its outlook for the remainder of the year. TSM is the worlds largest outsourced chip fabricator by revenue. The stock closed today at $7.94 and traded as low as $7.82. The stock volume was 17Mil shares traded compared to an average trading volume of 9Mil shares.

Greedy short sellers are likely pushing the price of the stock down due to a drop in prices in the Taiwan Stock Exchange.

My target price for the stock is $10 by the end of the year and $11-13 for the first half of 2006.

*Disclaimer, I own 4598 shares of TSM purchased at an average price of $9.0235 per share.

Morgan Stanley Purchases Property Abroad

A trusted source that works for a government sponsored Shanghai Investment Company, tells me that Morgan Stanley is busy buying property in Shanghai. The interesting thing about Morgan Stanley purchasing property is that Morgan Stanley is advising its customers not to buy property from Shanghai citing over inflated prices. Meanwhile Morgan Stanley is busy investing in property development projects.

I believe the reason for the companies opposite messages is that following the .com bust, financial companies have come under increased pressure to separate their research and investment arms.

So while Morgan Stanley’s research arm is telling its customers not to buy Shanghai Property, Morgan Stanley is busy investing in Shanghai property. The prices in Shanghai have shot-up as much as 400% in some new commercial and residential developments over the last 5 years.

Relatively speaking Shanghai property is priced cheaply compared to other major international cities like Manhattan and Tokyo. The price per sq./ft is hovering around $500USD for prime residential property. Compared to other heated markets such as Dublin in Ireland, where a 10ft shed recently sold for $269,000, Germany’s residential market or Florida’s real estate boom, the rise in Shanghai’s prices seem timid. I believe the downside risk in Shanghai’s market is less substantial than other heated markets due to the relative low price.

RawGreed Ex-Tyco CEO Award

In one of the biggest cases of corporate greed in history, Ex-Tyco CEO Dennis Kozlowski was sentenced on Monday, September 19th, 2005 to 8 to 25 years in prision for stealing an estimated $600 Million from Tyco. Mr. Kozlowski reportedly spent the money on a private party for his second wife, apartments, fine art and other luxury items.

TYC, Tyco International, Ltd., engages in the design, manufacture, and distribution of electronic security and fire protection systems; electrical and electronic components; and medical devices and supplies, imaging agents, pharmaceuticals, and adult incontinence and infant care products. Its fire and security products include electronic security systems, fire detection systems, and suppression systems, as well as fire extinguishers and related products.

The stock is currently trading at 29.25 and saw little movement on todays announcement. I would avoid trading the stock until other issues such as potential shareholder lawsuits over corporate policy fail to emerge.

My only question is how did Tyco allow its Ex-CEO to get away with spending so much of its money? Tyco should be partically blamed for poor corporate governance and control policies. Mr. Kozlowski helped build a strong company but performance does not equal the right to steal from your company.