Tuesday, January 16, 2007

Calls of Note Part 1

- Banc of America notes adoption rate of Vista will be, in their view, the most significant of their '7 Forces in 07.' Based on firm's channel checks in 2Hof December with retail store sales reps, combined with assessment of customer reactions to Vista at CES (anecdotal in nature), they continue to believe that CES will have a positive impact with G7 consumers in 2007. Firm sees this process/trend as a gradual build during 07, rather than a sudden surge.

In contrast to firm's take of a modest PC market improvement due to Vista in 07, the latest Taiwanese ODM data, gathered during the week of Jan 8th, is a little softer than they projected, as overall ships appear to be up just 6% q/q, vs. estimate of 8-12% q/q, and 18% q/q last year. Firm believes that the slowing of the economy and some very modest slowdown in front of Vista launch played a role, with the force of the economy having a far greater impact.

Downward pressure came solely from desktop motherboards, down 10% y/y and down 4% q/q. Notebooks continue to drive growth, with very strong ships 35% y/y and 25% q/q. Notebook y/y growth accelerated for the first time in five quarters. This leaves them feeling confident in their 2007 20% y/y unit growth forecast.

Preferred PC names are HPQ and XRTX. They also think STX is well positioned with tech lead, and look for better entry point.

Notablecalls: Not actionable but good to know category.

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