TSM - Taiwan Semiconductor Manufacturing Company Limited
46.51 0.00 (0.00%)
After hours: 4:59PM EDT
| Previous close | 47.79 |
| Open | 46.83 |
| Bid | 46.44 x 800 |
| Ask | 46.83 x 1800 |
| Day's range | 46.30 - 47.56 |
| 52-week range | 37.18 - 60.64 |
| Volume | 8,727,735 |
| Avg. volume | 9,983,543 |
| Market cap | 230.181B |
| Beta (5Y monthly) | 0.61 |
| PE ratio (TTM) | 20.86 |
| EPS (TTM) | 2.23 |
| Earnings date | N/A |
| Forward dividend & yield | 2.85 (5.96%) |
| Ex-dividend date | 17 Jun 2020 |
| 1y target est | 59.23 |
- Zacks
TSMC (TSM) Stock Moves -0.06%: What You Should Know
TSMC (TSM) closed at $47.79 in the latest trading session, marking a -0.06% move from the prior day.
- Bloomberg
Huawei Warns of ‘Pandora’s Box’ If U.S. Curbs Taiwan Supply
(Bloomberg) -- Huawei Technologies Co. is bracing for its most difficult year on record in 2020, when tightening U.S. sanctions and the Covid-19 pandemic threaten to slam an already slowing business.Rotating Chairman Eric Xu said he’s aware of the potential for Washington to tighten restrictions on the company, including by stopping Taiwan Semiconductor Manufacturing Co. from selling chips to Huawei. The Chinese government wouldn’t tolerate such action and it would irrevocably damage the global supply chain, Xu said in some of Huawei’s strongest comments against the Trump administration’s measures so far.“If the Pandora’s box were to be opened, we’ll probably see catastrophic damage to the global supply chain -- and it won’t just be one company, Huawei, destroyed,” Xu told reporters after unveiling 2019 earnings. “I don’t think the Chinese government will just watch and let Huawei be slaughtered on a chopping board. I believe the Chinese government will also take some countermeasures.”China’s biggest tech company remains in Washington’s cross-hairs even as Covid-19 spreads across the globe. The White House is reportedly considering imposing restrictions on the sale of semiconductors to Huawei by global corporations such as TSMC and Samsung Electronics Co., a move that would effectively deprive the Chinese giant of the most advanced chip technology. That would escalate already damaging restrictions on Huawei, which on Tuesday reported net profit grew 5.6% -- the slowest pace of bottom line growth in three years.“Why can’t China ban the use of American 5G chips, base stations, smartphones and other smart devices based on the same network security reasons?” Xu said, adding he couldn’t confirm reports about curbs on TSMC.Huawei had previously reported sales growth of about 19%, to 859 billion yuan ($123 billion) in 2019, roughly the same as in the previous year. And the Shenzhen-based company’s profit improved to 62.7 billion yuan. But Xu said 2019 was its most difficult year yet, when it was forced to transform its business after expansive scrutiny and sanctions from the U.S. The effort to contain Huawei -- and by extension, China -- forced the company to turn inward.The Trump administration’s campaign to get allies such as Japan and Australia to shut out Huawei gear and phones helped drive sales in the Asia-Pacific down 13.9%, though that was more than offset by a surge at home in China.In the fourth quarter alone, which was most impacted by the U.S. prohibition on Huawei selling Android phones with Google’s mobile services, the company shipped roughly 55 million devices, calculated from the difference between its September shipments update and the year’s total. Of the 240 million Huawei and Honor phones shipped, 6.9 million had fifth-generation wireless networking, an area where the company remains a tech leader.Pelosi Joins Trump in Warning Europe of Huawei’s 5G ThreatContrary to warnings from American lawmakers and diplomats, numerous European countries like the U.K. and Switzerland have opted to use Huawei’s technology in building out their 5G networks. The U.K. and Germany have both echoed U.S. concerns about how far Huawei can be trusted with key infrastructure of the future, but those have not extended to the severity of an outright ban.Huawei faces tremendous pressure in overseas smartphone markets, where the U.S. ban on its use of Google Mobile Services severely undercuts the appeal of its devices. Without the Google Play Store and third-party app ecosystem, Huawei phones simply can’t compete with similarly capable alternatives from the likes of Samsung Electronics Co. and OnePlus. The company reported flat revenue in Europe, the Middle East and Africa alongside the drop in the Asia-Pacific. Those regions were two of its major growth engines in 2018, whereas now 59% of its sales are at home in China.China’s ambitious 5G network construction projects, which started in the second half of last year, also helped Huawei weather the international storm and sustain its core businesses.Huawei Makes End-Run Around U.S. Ban by Using Its Own ChipsFounder Ren Zhengfei initially estimated that Huawei’s May 2019 blacklisting by the U.S. could wipe $30 billion off annual revenues and threaten his company’s very survival, though he has tempered that outlook more recently. Huawei mobilized a massive effort to develop in-house alternatives to American software and circuitry, while U.S. suppliers like Intel Corp. and Microsoft Corp. found ways to continue supplying Huawei vital components it needed to make its products. Huawei is also selling base stations free of American technology in another effort to bypass the U.S. ban.With no relief from U.S. sanctions in sight and the coronavirus pandemic stifling business across all industries, Huawei anticipates its most difficult year yet. Chinese smartphone sales, which the company is now particularly sensitive to, are already hurting. And its global 5G installations, for which Huawei has secured more than 90 contracts worldwide, are hitting the brakes with many countries implementing lockdowns and the global economy at a standstill.(Updates with top executive’s comments from the second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
TSMC (TSM) Gains But Lags Market: What You Should Know
In the latest trading session, TSMC (TSM) closed at $49, marking a +0.27% move from the previous day.
- Bloomberg
Shielded from Pandemic, Work Continues in World’s Cleanest Room
(Bloomberg) -- A two-hour drive south of Amsterdam in Veldhoven, workers decked out head-to-toe in protective gear toil in vast assembly halls. Before entering the inner sanctuary of the facilities, they meticulously layer on masks, gloves and special socks. A single speck of dust or a hair can have devastating effects on production. The result of all this painstaking process is an environment that is 10,000 times more purified than outside.And as the coronavirus grips the world, it might just be the safest place to work right now.The teams belong to ASML Holding NV, which holds a de-facto monopoly on the industry of extreme ultraviolet lithography machines needed to make next-generation chips. Each cost about 150 million euros ($160 million) apiece and ship mainly to the U.S., Korea and Taiwan, where the likes of Intel Corp., Samsung Electronics Co. or Taiwan Semiconductor Manufacturing Co., known as TSMC, rely on them to make faster, cheaper and more energy efficient semiconductors.ASML manufacturing staff operate in an environment that is literally shielded from the coronavirus pandemic that has forced millions of workers around the world to isolate themselves from colleagues to slow the spread of the disease. As the rest of the Netherlands and much of the continent locks down, work in ASML’s Veldhoven clean-rooms has continued largely unhindered, potentially giving the company an edge for when corporate life returns to normal.“So far we have been able to keep our production going,” said Frits van Hout, ASML’s chief strategy officer, ASML. “The situation is of course dynamic. We encounter challenges as with every lockdown our suppliers will be affected, directly or indirectly.”Keeping DistanceLike other companies, ASML has also implemented a raft of contingency measures –from segmenting staff to drawing up plans if disaster strikes at a key supplier -- so it can keep manufacturing equipment for chip-makers around the world. Workers are split into two teams and are screened for virus symptoms via infrared thermal cameras at the entrance of the clean room in Veldhoven.Social distancing protocols are in effect, and the company has spaced out the morning and night shift to ensure the groups don’t meet, ASML said.Clean rooms are highly specialized infrastructure that’s costly to set up and maintain, making that kind of environment difficult to replicate in other industries. The biggest risk for the company lies not so much in its own operations seizing up but in a potential breakdown of its 5,000 suppliers, 790 of which provide materials and equipment that are used directly to produce the ASML systems.Besides its ultra-sanitized work environment, ASML has the benefit of making machines that are considered almost recession-proof, given its commanding lead in an industry on the cusp of another technological leap: high-speed 5G networks.On Track“Most customers want EUV and if ASML cannot deliver due to such a factor, then they know they have to wait until the next quarter because you cannot get it anywhere else,” said Marcel Achterberg, executive director of equity research at KBC Bank.The prized EUV machines are the size of a bus. Customers can order older equipment, but EUV delivers better resolution, smaller components and improved performance in the chips it produces.They’re a crucial source of revenue for ASML’s customers, too. By the end of next year, as much as half of TSMC’s revenue will depend at least partly on some EUV processes, according to Bloomberg Intelligence analyst Masahiro Wakasugi.Volume production of TSMC’s most cutting-edge 5-nanometer chips, which use EUV, is still “on track” for the first half of 2020 as previously stated by management, TSMC spokeswoman Nina Kao saidFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
TSMC (TSM) Stock Sinks As Market Gains: What You Should Know
TSMC (TSM) closed the most recent trading day at $43.88, moving -1.1% from the previous trading session.
- Bloomberg
Too Much Love for TSMC Proves Costly in Global Market Rout
(Bloomberg) -- Taiwan’s largest stock may be paying a price for being the darling of equity investors.Heading into 2020, analysts and strategists were falling over themselves to outline reasons Taiwan Semiconductor Manufacturing Co. would continue to outshine global peers. Its market value rose another $13 billion in the opening two weeks of the year, with shares continuing to set record highs. Now, investors are sitting on an 8.8% loss for 2020 after TSMC notched its lowest close in four months Wednesday.As TSMC shares are Taiwan’s biggest beneficiary of international cash, they’re also at the front of the line when foreigners pull back. As risk assets globally have slid to start 2020 due to the coronavirus outbreak, foreigners have sold more than $8 billion of Taiwan stocks, second most in Asian markets, according to data compiled by Bloomberg. Net foreign selling on Monday was $1.8 billion, according to exchange data, the most since 2007.TSMC’s 2020 stock drop, in line with the Taiex index, has occurred even as company revenue grew strongly after a weak start to 2019. Combined sales for January and February were a record NT$197.1 billion ($6.6 billion), 42% higher than a year earlier. Analysts see TSMC remaining on track to meet the better-than-expected revenue forecast given in January.This quarter is too soon to see material virus-related impacts for the likes of TSMC because of the time it takes to make wafers, said Citigroup Inc., which predicts record March revenue of above NT$110 billion. It added that even if the company sees some second-quarter order cancellations, the spots could be immediately filled by excess orders TSMC has. That makes the firm “the most resilient of its peers.”But Citigroup, as well as Daiwa Capital Markets, does say that TSMC will feel some pressure if the virus outbreak continues well into 2020. For now, though, Daiwa suggests investors “accumulate the stock on any weakness.”(Updates market levels in second and fourth paragraphs.)To contact the reporter on this story: Cindy Wang in Taipei at hwang61@bloomberg.netTo contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Kevin Kingsbury, David WatkinsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
The Zacks Analyst Blog Highlights: Advanced Micro Devices, Intel, Taiwan Semiconductor, Smith Micro Software and The Rubicon Project
The Zacks Analyst Blog Highlights: Advanced Micro Devices, Intel, Taiwan Semiconductor, Smith Micro Software and The Rubicon Project
- Bloomberg
Huawei Makes End-Run Around U.S. Ban by Using Its Own Chips
(Bloomberg) -- Huawei Technologies Co., the Chinese technology giant barred from doing business with U.S. suppliers, is finding a way around the strict limits imposed by the Trump administration.The Commerce Department, citing national security concerns, has largely forbidden American companies from selling Huawei the computer chips it needs to make a piece of equipment integral to newly introduced high-speed wireless networks. In response, China’s largest technology company ramped up its own capabilities to manufacture the gear, which is known as a base station.In a sign that the self-reliance is working, Huawei in the fourth quarter sold more than 50,000 of these next-generation base stations that were free of U.S. technology, according to Tim Danks, the U.S.-based Huawei executive responsible for partner relations. That’s only about 8% of the total base stations that Huawei’s sold as of February, but the company is quickly ramping up at its secretive HiSilicon division to make more of these American component-free devices, Danks said.“It’s still our intention to return to using U.S. technology,” he said. The longer Huawei goes without access to U.S. suppliers, the more unlikely it is to be able to return to using them, Danks added.A base station is a typically suitcase-sized piece of machinery that’s used to help connect wireless phones to fixed-line networks carrying internet traffic, and it’s an essential ingredient in the next, or fifth, generation of mobile networks. Popular among telecommunications providers, Huawei’s base stations are widely considered among the most reliable for the price.Read about how Trump’s blacklisting of Huawei is failing to halt its growth.U.S. officials accuse Huawei of stealing valuable intellectual property and violating a trade embargo with Iran. The Trump administration blacklisted the company last year, saying there’s a risk Huawei could give Beijing access to sensitive data coursing through telecommunications networks that employ its gear. Huawei has denied the allegations. Critics also said the U.S. government imposed the sanctions to hobble China’s leadership in key aspects of 5G technology.As of early February, Huawei had shipped about 600,000 5G base stations to mobile phone companies racing to upgrade networks to the new standard, which is designed to deliver data at faster speeds to a broad range of wirelessly connected devices -- not just mobile handsets. Most of these base stations were made using stockpiled chips bought before the ban.While Huawei doesn’t disclose its suppliers, base stations typically rely on a kind of processor called a field programmable gate array that’s made by Intel Corp., a chipmaking colossus based in Santa Clara, California, and Xilinx Inc., in neighboring San Jose. Those chips provide flexibility that makes it easier to update machines as new standards and features are added. Huawei’s chips are application-specific, meaning they’re tailored to particular functions and it takes more time and money to replace them. That’s a disadvantage at a time when new technology, such as 5G, is in its infancy and still subject to big changes.Read more: Huawei Engineers Go to 24-Hour Days to Beat Trump BlacklistThe U.S. initially clamped down on all shipments of U.S. supplies to Huawei, which had spent more than $10 billion a year on U.S. products, but later began making some exceptions. Xilinx and fellow chipmakers Micron Technology Inc. and Broadcom Inc. have all reported falling earnings on reduced or eliminated sales to Huawei.Attempts by the U.S. to persuade European and other allied countries to ban Huawei equipment have fallen short, and chipmakers in Asia and Europe continue to supply it.For their part, American chipmakers have argued that banning the supply of parts that Huawei can get elsewhere is counterproductive, saying that the lost revenue crimps research and development budgets and the ability to produce the best chips in the future. Huawei’s HiSilicon chip unit designs semiconductors and has them manufactured by industry-leading plants owned by Taiwan Semiconductor Manufacturing Co. But Washington is even now said to be looking into ways to curb the world’s largest contract chipmaker on grounds of national security, and deprive Huawei of its largest semiconductor manufacturing partner.The Chinese company led the market for base stations with a 28% share last year, according to New Street Research. The investment company predicts demand for that equipment will rise this year with the 5G network buildout. Nokia Oyj and Ericsson AB are its two largest competitors in this market.How Huawei Landed at the Center of Global Tech Tussle: QuickTake(Updates with details of TSMC’s role in the 11th paragraph)\--With assistance from Gao Yuan.To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Tom Giles, Edwin ChanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
The Zacks Analyst Blog Highlights: Nvidia, AMD, TSMC and Intel
The Zacks Analyst Blog Highlights: Nvidia, AMD, TSMC and Intel
- Bloomberg
Qualcomm Adds Another New Chip Aimed at Pushing 5G Adoption
(Bloomberg) -- Qualcomm Inc. announced its third new chip for 5G smartphones that the company said will help cellular service providers and deliver another improvement in mobile phone performance.The X60 is the chipmaker’s latest modem for the fifth-generation networks that debuted only last year and will become the mainstream service this year. The company said phones based on the new chip will go on sale in 2021. A modem is a type of chip that turns radio signals into voice and data.The part will allow a step forward in what’s called carrier aggregation, according to San Diego-based Qualcomm. That means phones will use a combination of the new higher frequencies that make up 5G and the airwaves relied on by older networks. Data will be sent to and from phones much quicker than using one narrower piece of spectrum.Phone companies, which typically own the rights to use scattered batches of airwaves, will be able to get more efficiency out of their expensive assets. That should help persuade the carriers, who are key in the rollout of 5G, that it’s in their interests to speed up introduction of the new service, according to Qualcomm.Qualcomm’s chip revenue has reflected the surge and the maturing of the smartphone industry. The company’s semiconductor sales peaked in fiscal year 2014 at more than $18.6 billion. In the last few years as consumers have held onto their phones longer, revenue has declined to $14.6 billion.The chip will also be the first to be made with 5-nanometer technology, the most advanced production technique in the semiconductor industry. Qualcomm outsources its manufacturing to companies such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.Qualcomm was among the biggest beneficiaries of the shifts to previous generations of mobile phone technology, when its chips became the market leader. In the decade since 4G began, smartphone sales have slowed given incremental improvements in form and function. That has hurt Qualcomm’s growth as the company is facing more competition, including from customers such as Samsung and Huawei Technologies Co.To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.netTo contact the editors responsible for this story: Alistair Barr at abarr18@bloomberg.net, Andrew Pollack, Dan ReichlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Apple's Virus Cut Puts All Eyes on Tech Bellwether
(Bloomberg Opinion) -- Apple Inc. has thrown out its March-quarter revenue guidance three weeks after providing it.Despite factoring in possible downside from the China coronavirus outbreak in its original forecast, the iPhone maker realized that things have deteriorated much more than it had anticipated. It gave no new figure and merely said the old one no longer applies, an admission that the company really can’t quantify the impact.While we should expect similar downbeat tones through the rest of the sector, this really means we should keep tabs on the one company that sits at the heart of the global technology supply chain: Taiwan Semiconductor Manufacturing Co.Apple is TSMC’s largest customer. When the chipmaker gave its own first-quarter and full-year forecasts Jan. 16, the world had barely heard of the disease now riveting its attention.Since then, Apple has shut stores in China and downstream assemblers like Hon Hai Precision Industry Co. have struggled to ramp up production after the Lunar New Year break amid continuing quarantines and a shortage of workers willing to return to the factory floor.Nvidia Corp., which designs graphics chips, is another major client of TSMC. On Feb. 13, it said the virus had cut its forecast by $100 million. That’s only around 3% of expected revenue for the quarter, but it all eventually adds up. Alibaba Group Holding Ltd., not a direct customer, forecast a decline in revenue from its core businesses as consumers on its e-commerce platform shy away from spending. At least some of those lost sales will be electronics products, which use chips made by TSMC.Chinese companies, including Huawei Technologies Co., accounted for 20% of TSMC’s revenue last year. With numerous enterprises in China on lockdown, adding to the squeeze on both demand and production, it’s unlikely such clients will be able to escape the impact.And last week, wireless industry association GSMA scrapped its annual Mobile World Congress scheduled for Feb. 24 in Barcelona because most of its major participants had already pulled out. This isn’t a consumer event, but the cancellation shows the breadth and reach of the outbreak’s impact on business. Whichever way you look at it, the global tech slowdown leads back to TSMC. Revising guidance mid-quarter isn’t without precedent, and TSMC usually does with a statement filed mid-afternoon Taipei time. It did so a year ago this week, cutting its sales and profit outlook after facing troubles with chemicals used in the manufacturing process. The result was a 10% reduction in operating profit. Just a few months before that, a production hiccup caused by a computer virus in its equipment hurt gross profit by around 5%. An earthquake four years ago sliced operating income by about 7%. The biggest mid-quarter guidance cut I could find is the 25% hit to operating profit that it took in December 2008 as the financial crisis brought the world economy to a halt.To be sure, it’s not certain that a cut will be necessary this time. Clients may decide that they want to keep building up inventory of the chips that come out of TSMC’s factories. But at some point, end-demand may dictate a more cautious approach to procurement. This epidemic is proving hard to quantify, so TSMC’s biggest challenge may not be whether to revise guidance, but what new number to give. To contact the author of this story: Tim Culpan at tculpan1@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Applied Materials Gives Bullish Outlook on Chip Industry Uptick
(Bloomberg) -- Applied Materials Inc. gave a bullish sales forecast for the current quarter suggesting its chipmaker customers have returned to spending more on their factories.The Santa Clara, California-based company is the largest maker of machinery used in the manufacture of semiconductors, which are among the most important parts of the electronics supply chain. Its customers include Samsung Electronics Co., Intel Corp. and Taiwan Semiconductor Manufacturing Co. That makes Applied Materials’ results and forecasts important early indicators of future demand in the electronics industry.Key InsightsFiscal second-quarter sales will be $4.34 billion, plus or minus $200 million, Applied Materials said Wednesday in a statement. That compares with analysts’ average estimate of $4 billion, according to data compiled by Bloomberg.Adjusted earnings will be 98 cents a share to $1.10 a share in the period ending in April, the company said. Analysts projected 92 cents.“We believe we can deliver strong double-digit growth in our semiconductor business this year as our unique solutions accelerate our customers’ success in the AI-Big Data era,” Chief Executive Officer Gary Dickerson said in the statement.Chip-equipment makers often experience wild earnings swings. Machines cost tens of millions of dollars each. Delaying factory build outs is one of the fastest ways a chipmaker can preserve cash when they’re unsure of future demand.Net income was $892 million, or 96 cents a share, in the fiscal first quarter, compared with $771 million, or 80 cents a share, a year earlier.Revenue gained 11% to $4.16 billion in the period ended Jan. 26, making it the first quarter of year-over-year growth in five quarters. Analysts were looking for $4.11 billion.Stock ReactionShares rose about 1% in extended trading after the announcement. The stock closed at $65.37 in New York and has increased 60% over the last 12 months.More InformationFor more details, click here.To see the statement, click here.To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.netTo contact the editors responsible for this story: Alistair Barr at abarr18@bloomberg.net, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Applied Materials (AMAT) Preview: Buy the Semiconductor Stock Ahead of Earnings?
Applied Materials has topped quarterly earnings estimates in the trailing four periods to help the stock jump 55% in the last 12 months. Is now the time to buy AMAT ahead of its Q1 fiscal 2020 earnings release...
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Nvidia Q4 Earnings Preview: Will NVDA Stock Continue to Soar?
Investors need to understand if Nvidia stock looks poised to continue its climb, with the chip company set to report its fourth-quarter fiscal 2020 results on Thursday, February 13...
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3 Semiconductor Stocks to Buy After Strong Earnings for 2020 Chip Growth
We found three highly-ranked semiconductor stocks that recently topped earnings estimates that investors might want to buy right now...
- Bloomberg
Alphabet Cracks the Lid on a Black Box That’s Still Too Opaque
(Bloomberg Opinion) -- Let me start by saying that I am new to writing about Alphabet Inc. I’m usually based in Asia, where I write about Foxconn Technology Group, Samsung Electronics Corp. and Alibaba Group Holding Ltd., among others.These are huge companies that lead their sectors and have different levels of transparency. When I started preparing to cover U.S. technology giants, I figured that the high standards of earnings disclosure at the center of global capitalism would make life a little easier.Then I started looking at Alphabet Inc., which on Monday reported revenue that missed some estimates. It beggars belief that for more than a decade analysts, investors and traders were forced to navigate blind through the black box that was its earnings report.Then came Monday’s announcement.For the first time, executives deigned to tell investors just how much revenue comes from YouTube ($15.1 billion) and from its cloud business ($8.9 billion). It feels like a revelation, as though we’ve been let in on a secret. But when you live in a dark cave, even candlelight can seem bright.While I welcome this move toward transparency, it feels more like a company trying to pacify investors rather than truly inform them. It’s long overdue, but the company can do even more.Before the fourth-quarter earnings announcement, Alphabet broke down advertising revenue only by properties, by network members’ properties, other revenue and other bets. By region, investors are given EMEA, APAC, U.S. and Other Americas. And it shares traffic acquisition costs. Now it’s added two more line items: YouTube, the world’s most ubiquitous video-sharing platform, and Cloud — a hot business that competes against Amazon.com Inc., Microsoft Corp. and dozens of others.Despite this additional information, I still don’t think investors truly have an understanding of exactly where this company gets its revenue, what divisions make and burn money, and which platforms are lucrative and which are loss leaders (or just losers).Google search and other advertising accounted for 61% of sales last year; that’s a very big pie that could certainly by sliced up further. It doesn’t feel like a coincidence that the two extra divisions it’s breaking out are the ones that grew the fastest last year.Still lacking is any clarity on the product that gives directions to more people than anyone else (Google Maps), the one that has become one of the most pervasive email services (Gmail) nor the operating system that’s in the hands of literally billions of people across the planet (Android). I don’t own shares in Alphabet or any company I cover. But as an investor, I’d want to understand just how Google monetizes the Android operating system and whether that’s improving or deteriorating in tandem with the spread of smartphones globally. I’d also like to know whether Maps and Gmail are winners or loss leaders. Of course, it would be fascinating to know how that $1 billion HTC Corp. acquisition is faring, given that it’s meant to be a springboard into hardware devices that pit Google against its own Android partners.I guess Alphabet just lumps all this in with Google search or “Other.” Investors are right to want more information.And it’s not some esoteric pondering. There’s evidence to suggest that disclosure truly matters. For example, a study by Stanford University accounting professor Mary Barth and her co-authors found that “firms with more transparent earnings enjoy a lower cost of capital.” And Professor Robert G. Eccles of the University of Oxford and previously of Harvard Business School has written numerous papers discussing transparency from different angles, including the conclusion that the U.S. ranks low in terms of quality of disclosure.Amazon.com Inc. is an example of a company that’s improving. Its disclosures, in my opinion, have become more enlightening over the years to the point that observers can analyze multiple slices of the business to get a sense of which units are more profitable, which are growing, and where it’s making money. Investors can see, for example, that its overseas business is a loser and physical retail shrank. Yet those facts didn’t stop its market value from surpassing $1 trillion last week. Amazon still falls a little short, though.For a gold standard in transparency, let me offer up Taiwan Semiconductor Manufacturing Co., which trades in New York and Taipei. Despite being a $270 billion company entrusted with the secrets of the world’s most important technology clients, the chipmaker offers so much information about how it operates that you could almost replicate its business model. It may be worth noting that both TSMC and Amazon provided better risk-adjusted returns over the five years to Dec. 31 than Alphabet, though remember that correlation doesn’t equal causality.So while I applaud Alphabet on these latest disclosures, there’s no doubt that the world’s biggest search engine has a whole lot more to share.To contact the author of this story: Tim Culpan at tculpan1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Samsung Profit Slides 38% With Stubborn Memory-Chip Slump
(Bloomberg) -- Samsung Electronics Co. reported a 38% decline in profit due to falling memory chip prices, a warning sign for the global technology industry as it navigates trade tensions and the coronavirus outbreak.Net income tumbled to 5.23 trillion won ($4.4 billion) for the three months ended December, compared with the 5.31 trillion won average of projections. The miss is a surprise because Samsung carefully orchestrates earnings, including reporting preliminary numbers a few weeks before final results. The early numbers this month beat analyst estimates.Samsung has been struggling with a stubborn slump in the memory chip business, historically its most profitable division, and said the weakness may affect first quarter results. The company also flagged soft demand in the display business for some premium mobile screens and a bigger loss on large displays because of sliding LCD prices.“There are too many factors that need to be considered to conclude that we have entered into a definite demand upcycle,” said Jinman Han, senior vice president of the semiconductor business at Samsung, highlighting macroeconomic and geopolitical uncertainties that may have a negative impact in the future.The coronavirus that began in China has closed stores and factories in the country, the manufacturing base for much of the tech industry. Several companies, including Apple Inc., have said they are uncertain how the outbreak will affect them.Samsung shares fell 3.2% in Seoul. They had increased 5.9% this year through Wednesday, after rising about 44% in 2019. Operating profit was 7.16 trillion won on sales of 59.9 trillion won, the company said, in line with preliminary numbers released earlier this month.Apple, a rival and customer, reported strong earnings this week, sending shares to a record in U.S. trading. A surge in iPhone sales pushed the Cupertino, Calif.-based company into an approximate tie with Samsung for smartphone shipments in the fourth quarter, according to market researchers.Earlier this month, chip giants Taiwan Semiconductor Manufacturing Co. and Intel Corp. provided bullish outlooks for 2020, driven by demand for cloud-computing centers and fifth-generation smartphones.Samsung, SK Hynix Inc. and Micron Technology Inc. together control more than 90% of the market for dynamic random access memory, or DRAM, chips, used in everything from data servers to smartphones. Spot prices of DRAM and NAND started increasing in December after getting hammered for a year amid rising trade tensions between the U.S. and China as well as plateauing smartphone sales.The chip industry has been anticipating a recovery as the roll-out of fifth-generation wireless technology spurs higher demand for memory and greater speeds to process data. Samsung did say there are signs of recovering demand from data center customers and wireless operators.Contract prices for 32-gigabyte DRAM server modules fell about 5.9% in the December quarter, narrower than the 14% slide of the September quarter, according to InSpectrum Tech Inc. Prices for 128-Gb MLC NAND flash memory chips held steady in the final three months of 2019.“Memory-chip suppliers still have a high level of inventories,” said Lee Joo-wan, research fellow at Hana Institute of Finance. “As the first half of the year is off-season, it may take time for recovering prices to be reflected in the performance of suppliers.”Samsung’s smartphone division had a stronger quarter, posting 2.52 trillion won in operating income, up from 1.51 trillion won a year earlier. Although the total shipments of smartphones slightly decreased, high-end devices such as the Galaxy Note 10 and Galaxy Fold boosted profits in the fourth quarter.The average selling price of Samsung handsets and tablets was $216 in 4Q, which the company forecasts will increase this quarter as it launches new flagship and premium models. Samsung’s new clamshell-type foldable phone, which will be unveiled Feb. 11, is expected to further fuel growth, said Greg Roh, senior vice president at HMC Securities.Samsung’s operating profit from its display business was about 220 billion won, down from about 970 billion won a year earlier. The company is investing heavily in flexible organic light-emitting diode panels, upgrading its technology to ward off rising competition from Chinese suppliers such as BOE Technology Group Co.The consumer electronics unit, which includes TVs and appliances, had operating profit of about 810 billion won.(Updates with closing share price in sixth paragraph)To contact the reporter on this story: Sohee Kim in Seoul at skim847@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter Elstrom, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Samsung Fails to Deliver the Expected Sunshine
(Bloomberg Opinion) -- Samsung Electronics Co.’s earnings report and outlook reflect doom and gloom. Many are surprised. Positive signs from chip rival Taiwan Semiconductor Manufacturing Co. and smartphone stalwart Apple Inc. had fed the belief that the South Korean giant would put the worst behind it. The key takeaway here is that a rising tide doesn’t lift all boats.On the surface, as the one of the world’s biggest technology companies, it might be reasonable to suggest that Samsung ought to benefit from the turnaround enjoyed by major rivals. In reality, a major reason why Samsung is suffering while others rebound is that the company’s big strengths — memory chips and displays — are precisely the weakest parts of the tech sector right now.Its semiconductor unit posted a 56% drop in operating income for the period and its display business fell 77%. Between them, these component divisions usually contribute half to two-thirds of its profit. TSMC, Intel Corp. and even Advanced Micro Devices Inc. don’t dabble in such commodity products. When things are good in memory and displays, Samsung soars because it’s the world’s largest supplier of both. But when times are bad, like now, it suffers the most. That pain will continue in both divisions this quarter, with executives noting in a conference call that continued weakness in demand will hurt both revenue and profits.Bulls will find positive signs if they want. The memory chip market will surely improve as the year progresses, but heck, it couldn’t get much worse. And the whole world — from TSMC to Intel to Xiaomi Corp. — is betting that a 5G rollout will juice sales across the board. Just because TSMC, Apple and Intel reported solid results and gave optimistic outlooks doesn’t mean that every company in the sector is set to benefit from a turnaround in hardware. AMD, Intel’s chief competitor in computer chips, provided guidance just a day earlier that could be characterized as a bit light. Its shares fell 6%, their largest decline since August.Samsung’s 1.5% miss on net income was a break from the previous two quarters, when it surpassed analyst estimates. We already knew sales and operating figures from preliminary results provided earlier this month that hinted that things had reached a bottom and pointed to positive signs ahead. Operating income fell 34%, but was better than estimates, which makes this weak net profit figure confounding.The only division that didn’t share the pain is smartphones, a sandbox that Apple also plays in. Operating profit from that division climbed 67% from a year prior. But Samsung noted that the figure will remain only “steady” this quarter since an expected revenue boost from new models, including a foldable handset, will be offset by higher marketing costs. In the end, it may be best to look at reality. Samsung has chosen a strategy that allows it to dominate a select part of the tech industry. Unfortunately, that means feeling the most pain when such a bet doesn’t pay off.To contact the author of this story: Tim Culpan at tculpan1@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Zacks Investment Ideas feature highlights: Intel, Nvidia, Broadcom, TSMC and Qualcomm
Zacks Investment Ideas feature highlights: Intel, Nvidia, Broadcom, TSMC and Qualcomm
