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- THE FRIDAY LETTER -
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| http://www.gilder.com/
| Issue 272.0/November 17, 2006
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HEADLINES:
- The
Week / Investors Underestimating Anadigics
- Friday
Feature / World's Most
Valuable Patent Portfolios
- Friday
Blogger Bonus / Sooner or
Later, Scarcity Bites Back
- Readings /
The
Week /
Investors Underestimating Anadigics
Technology Analyst, Charlie Burger (October 2006 Gilder
Technology Report excerpt.):
Now
may be your last opportunity to pick up Anadigics (ANAD) at bargain
prices. This master of low-power amplifiers is sailing through its earnings
inflection point with impressive incremental margins, and investors appear to
be underestimating the company’s earnings potential as well as its market
opportunity.
Anadigics
commands impressive incremental operating margins partly because its
cutting-edge six-inch wafer fab in Warren, New Jersey produces more than twice
the RF die per wafer compared to competing four-inch fabs. Built in 1999 and
expanded in 2004, the structure for the most part has been depreciated. Since
GaAs (Gallium Arsenide) fabs are similar to analog fabs in that they do not
become outdated quickly, management believes it has sufficient capacity to
continue growing its business for 2 to 3 more years.
Benefiting
from the surging wireless LAN (WLAN), 3G wireless, and broadband markets,
Anadigics has been gradually filling its fab to fuel its high incremental gross
margin, adding a couple of percent to utilization each quarter. In fact, the
company has been growing significantly faster than its end markets because with
each new generation of devices, Anadigics roughly doubles the content per
device. For example, 3G cell phones require multiple power amps (compared to
one in each 2G phone) to support 2G and 3G air interface standards across
multiple frequency bands. In broadband, demands on tuners are increasing as
cable TV operators expand their services and as set-top boxes add more complex
features. A major supplier of analog video tuners, Anadigics is expanding into
digital tuners in time for the rise of HDTV.
On the strength of its technology, Anadigics is ascending quickly into 3G,
enabling Samsung’s ultra-thin phones by offering a 30% space saving over
competing products and burrowing deeper and deeper into Verizon (VZ)
accounts, where chocolate lovers can thank Anadigics for supplying all the
power amps in the candy box. Anadigics is strategically positioned to benefit
from all 3G technologies, including CDMA2000 and WCDMA.
Through
partnerships with the likes of Qualcomm (QCOM), Texas Instruments
(TXN), Marvell (MRVL), Intel (INTC), and Cisco’s (CSCO)
Scientific Atlanta, Anadigics has been able to control operating expenses by
leveraging R&D, sales and marketing, and manufacturing resources. Because
of the increasing complexity of front-end modules, Anadigics requires advanced
knowledge of its customers systems in order to incorporate its chips into them.
What makes these partnerships critical and enables Anadigics to create
barriers to entry for its competitors?
Read
the complete October issue of the GTR to learn more. PLUS, get in depth
analysis on Corning (GLW), EZchip (LNOP), Ikanos (IKAN), NetLogic
(NETL) and Zoran (ZRAN), logon with your subscriber ID at http://www.Gildertech.com.
|
George Gilder’s “Telecosm Technologies” portfolio is up
326% since the market low |
Friday
Feature
/ World's Most
Valuable Patent Portfolios
Excerpted posts from the www.Gildertech.com
subscriber-only message board.
GTR Subscriber (11/10/06): IEEE ranks Finisar’s (FNSR) patent portfolio as
tops in the Telecom Equipment market--ahead of Cisco (CSCO), QUALCOMM
(QCOM), Nokia (NOK), Ericsson (ERIC) and many other big
names. This blew me away. I know very little about FNSR other than
noting its frequent mentions on this [Gilder subscriber message] board.
(See: IEEE Spectrum ranks the world's most valuable patent
portfolios,
http://www.spectrum.ieee.org/nov06/4699)
George
Gilder (11/11/06): Altera
(ALTR) is
twentieth in the “semiconductor manufacturing” category, behind Taiwan Semi
(TSM) at nineteenth. The more relevant rival Xilinx (XLNX) is at ninth.
Semitool (SMTL)—eighth in manufacturing equipment ahead of rival Novellus
(NVLS)—I has some of the strongest IP in the business. I was surprised, though,
by FormFactor (FORM), the packaging innovator, which someone on the
board has been pushing me to investigate. I guess I should.
The real wow and whopper is Netlogic (NETL) at tenth. This, in a noggin
guess, makes it the only company founded in the 21st Century to make
any of the lists.
Also stunning is Micron (MU) at number one. Hooray, Micron! It was my
first pick as a semiconductor analyst when it was an unknown gang of chip
designers in Boise presuming to enter the fray in DRAMs at the formidabl—some
said impossible—64K generation (the story is in my book, Spirit of
Enterprise). I have always planned to put it on the list in a sell-off, but
I have always missed the boat whenever it foundered. Also, the advance of phase
shift memory is signified by Ovonyx in eighth place (founded by Micron's
founders).
Logon with your subscriber ID at www.Gildertech.com
to read more posts by George Gilder and fellow GTR subscribers.
|
The Gildertech Blog, http://blog.gildertech.com/ | Logon now to see what’s new. |
Friday Blogger Bonus / Sooner or
Later, Scarcity Bites Back
Wired Editor-in-Chief, Chris Anderson (11/13/06): Sooner or
later, scarcity bites back.
The always astute Nick Carr points out that the traditional scarcity
functions that hold back the productivity efficiencies promised by Moore's
Law--software and human learning curves--have been joined by another:
electricity consumption.
“It's certainly true that, from the standpoint of the consumers of
basic computing resources, those resources often seem "sufficiently
abundant as to approach free." They are abundant, and that does
recast a lot of economic tradeoffs, with far-reaching consequences. But if we
step back and look at the supply side of computing, we see a very different
picture. What Gilder calls "petascale computing" is anything but
free. The marginal cost of supplying a dose of processing power or a chunk of
storage may be infinitesimal, but the fixed costs of petascale computing are
very, very high.”
Nick's article-length post, which builds on the implications
raised in George Gilder's Wired article
(from which the illustration above was taken) and neatly squares it with his
characteristically contrarian comment, is masterful. Read it all.
Check out Chris’s Long Tail blog:
http://www.longtail.com/the_long_tail/2006/11/more_on_the_eco.html
RELATED READING
The Information Factories, By George Gilder
http://www.wired.com/wired/archive/14.10/cloudware_pr.html
Welcome back to frugal computing, By Nick Carr
http://www.roughtype.com/archives/2006/11/welcome_back_to_1.php
|
Did you miss GILDER/FORBES Telecosm 2006? |
Readings /
Human
Health in the Telecosm
http://blog.gildertech.com/
Inside Sony’s Playstation 3
http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=194400567
Qualcomm:
Contrarians At The Gate
http://www.networkworld.com/cgi-bin/mailto/x.cgi
Exporting
jobs: The bright side
http://www.optimist123.com/optimist/2006/11/exporting_jobs_.html
The
Search Engine That Would Outdo Google
http://alwayson.goingon.com/permalink/post/7053
Milton
Friedman
http://www.nysun.com/article/43712
Remembering
Milton Friedman
http://www.nysun.com/specials/friedman.php
The
Federal Budget’s Long Emergency
http://www.aei.org/publications/pubID.25133,filter.economic/pub_detail.asp
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Research: Sandy Fleischmann / sfleischmann@gilder.com
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