Coming into focus

Joining the “what are they thinking parade?”, Chipmaker Xilinx (XLNX) posted higher quarterly profit, but revenues fell on weakness in Europe. The company also guided revenues to be flat to down slightly sequentially for its September quarter. First-quarter revenue fell to $445.9 million from $481.4 million. Profits were $84.3 million, or 28 cents per share. Analysts, on average, were looking for net profit of 29 cents on revenues of $452.9. Miss, miss and lowered guidance. I’ve been chronicling the semiconductor and capital equipment group over the last week and I don’t see a real encouraging theme here. But this is the sector that is not specifically housing and mortgage, so by default it has been a “Buy” for Wall Street for a lack of any other viable theme. Again, these folks aren’t paid to warn folks to head for the hills, so they have to come up with something and it usually involves the recommendations of a group from which they get some of their underwriting and M&A fees. Advanced Micro Devices (AMD), Intel’s primary rival reported its third quarterly loss in a row last night on its prolonged price war with Intel. Advanced Micro said its net loss was $600 million, which equates to $1.09 per share loss for its second quarter, compared with a profit of $88.9 million, or 18 cents a year earlier. This loss occurred even as Revenues were up 13-percent to $1.38 billion, from $1.22 billion a year earlier. What does that say about an industry that shows robust sales increases but loses that much money anyway? Just think when demand falls off as the so-called “contained” housing and mortgage crunch works its way through the pipeline. As a reminder, Intel came in with horrific margins earlier in the week. Sandisk (SNDK) said that its average price per megabyte sold declined 65% on a year-over-year basis and 26% sequentially. SanDisk is largest manufacturer of flash storage cards used in cameras and other consumer electronics gadgets. Accounts Receivables also increased sequentially to $311.7-million from $144-million in April. But shares surged this morning because Chief Executive, Eli Harari, predicted that demand for some of SanDisk's memory products could “outstrip supply” in the coming months. More empty promises from another chip related CEO, but little beef.…. Cypress Semiconductor (CY) said “second-quarter profit rose sharply.” No kidding, that was the headline. But that feat was achieved by the liquidation of 7.5-million shares of SunPower Corp. (SPWR) that it had owned and subsequently counted the proceeds as revenues. Its balance sheet raised numerous questions with huge bulges in Accounts Receivables, Inventories and Goodwill. Away from chips, Google (GOOG), of course is one of those “love the company, suspicious of the current stock price things.” Its price took a pounding today after reporting year-over-year net-per share profit growth of just 25.8-percent. A stock with a $171-billion market that trades at a 46x multiple is just plain vulnerable when it becomes clearer that it’s in the twilight of its hyper-speed earnings growth era…. On the private-equity front, shares of previously LBO’d online travel agency Orbitz Worldwide (OWW) fell 3-percent in its reintroduction as a public company. Orbitz was spun off from Travelport, which is part-owned by private-equity firm Blackstone Group (BX). This was even as underwriters had to lower its projected offering price. This spells trouble for all those LBOd deals that have been financed and are targeted to be reintroduced into the IPO market in the future. And we can pretty much forget about the deals that have been announced, but not yet financed. Instances like the Orbitz fizzle will certainly add to consternation among bankers concerning the viability and wisdom of these deals. And for anyone with cognitive abilities, I believe it’s safe to conclude that the environment is only going to deteriorate from this point forward in spite of protestations otherwise. The denial we’re about to see concerning this issue will navigate a similar path of denial seen traveled by that of housing/mortgage and CDO parade of denial…The yen popped higher around 10:15 AM EST in the U.S. It looks like someone is being forced to reverse their carry-trade. A chart of the yen looks fairly appealing to me. Also very noteworthy was the fact that gold moved higher even as the subprime/CDO/structured credit complex stressed again. The dollar index, now down to levels last seen in 1992, may have been the primary catalyst for gold’s sturdiness. This was in stark contrast to the first major convulsions in late February and again a few weeks ago when news of Bear Stearns’ un-hedged, hedge funds hit the tape, gold had headed lower with everything else in those two prior instances. The Dow finished lower by 149-points, just 1.1-percent from its all-time high. Naturally, seeking a flight to safety, Apple Computer (AAPL) was up over $4/share at one point during the day indicating that even on a day of risk aversion, a palpable lack of fear was still easy enough to find.