Tuesday, September 19, 2006

Calls of Note Part 4

Merrill Lynch comments on Maxim Integrated (NASDAQ:MXIM) following last night's warning saying business was still slow entering the third quarter for all of the analog companies in their coverage, and Maxim had been banking on seasonally normal pickup over the course of the quarter. The firm is currently visiting companies in Taiwan at the moment and it's clear that a pickup has occurred, especially in the computing and display markets, but it's a case of too little too late for Maxim. Other analog companies should be seeing similar issues, and in particular they think there could be some slight risk to the Q3 numbers atIntersil (ISIL).

From an investment standpoint, the case that the firm articulated in July for owning
semiconductor stocks continues to make sense. Companies like Maxim and National (NSM) are missing numbers, but the stocks have already declined and the trajectory of business through the quarter has been favorable. Firm notes that we saw National's stock trade up following that company's August quarter pre-announcement. They're not sure what Maxim will do tomorrow, but over the next few months they do expect the stock price appreciation that began in the summer to continue. At 18.8x 2007E GAAP earnings the stock looks attractively

Mainaints Buy.

Notablecalls: My gut is telling me MXIM won't finish up today.

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