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Rethinking the Technology Sector - Silos, Platforms, Clusters & Pipes
July 10, 2012
One key to investing in the technology sector is understanding the relationships among companies along the value chain. Traditional sector classifications are based on hardware, their constituent components, and software. However, these say nothing of how companies relate to one another. Rather than focus strictly on products, four constructs which better illustrate the relationship between companies are Silos, Platforms, Clusters & Pipes.

Windows Phone 8 Review - The Elixir of Delight
February 21, 2013
The market is greatly underestimating Windows 8, which is fresh, fun, stable, well thought-out, innovative, and falls short of Android and iOS in very few areas, while surpassing them in many. Most of all, it has the secret ability every product desires, the ability to delight.

Investment Letter – Big Data Times

Apple Finally Gets Bigger

April 24, 2014
Apple handily beat March-2014-2Q expectations and gave guidance, which although weak, was better than the worst case scenario. The market is now eagerly anticipating what's up Apple's sleeve for its product refresh in 2H14, and the expectation is everything, including earnings, get bigger. .… More

ARM Gets Bigger Slice of Shrinking Pie

April 23, 2014
ARM disappointed once again as its average processor royalty continued to slide on a YoY basis. The market still hasn't woken up to the reality that decelerating smartphone growth and declining semiconductor content per smartphone will keep ARM's royalty growth under pressure, despite the pick up in low-value non-mobile chips.… More

Samsung Barrels into Demolition Derby

April 10, 2014
Samsung reported better than expected 1Q14 results, most likely due to smartphone margins which are holding up. However, with global smartphone growth decelerating, and the competition on both the high and end low end set to be fierce, Samsung's high smartphone margins are at risk of getting run through the wood-chipper.… More

Mediatek Tees Up 4G Whole-in-One

April 8, 2014
Mediatek's 1Q14 revenue came in 3% above the high end of its guidance of NT$41.4-44.6bn. Although the market is concerned that its 4G offering will miss the market, the reality is 4G in China is just beginning a game which portends of extra innings, and Mediatek is playing the long game as opposed to gunning for a fast win.… More

HTC Puts Lipstick on its Piggy

April 7, 2014
HTC reported slightly disappointing 1Q14 results, with revenue coming 3% below the low end of the guidance range. With the new flagship, the M8, now out, 2Q14 revenue is expected to surge and temporarily lift earnings into positive territory. Unfortunately, the music will stop quickly as competition mounts in 2H14, including the iPhone 6.… More

Micron Makes DRAM Zombie Dance Again

April 4, 2014
Micron beat FY2Q14 expectations and guided for FY3Q14 revenue down on softening DRAM and NAND prices. Micron's rocket ride in DRAM margins and earnings has caused its valuation to become stretched making it vulnerable to any signs that growth is faltering. Although DRAM demand should improve in the back half of the year, history tells us that DRAM margins never stay this high for long.… More

Apples Drives Itself, Microsoft Follows Red Hot Chili Peppers Advice

April 2, 2014
Unconfirmed reports are floating around that Apple may buy 55% of its display driver IC supplier, Renesas SP, control of which could reduce costs and increase proprietary product development. Microsoft launched Windows Mobile 8.1 and announced it would remove the license fee for all mobile products with screens smaller than nine inches. The free OS will help MSFT cast a winder net to drum up traffic for its services, games, and advertising. More

Hon Hai Floats on Cloud 6, Compal Regains Mobility

March 28, 2014
Hon Hai is all about the iPhone 6 in 2014, which is expected to be refreshed with two large screen versions, one 4.7" and one 5.5". Given the pent-up demand for a large screen iPhone, shipments should surge, and if for no other reason than improving sentiment fuel the share price. Compal is also expected to bite off a piece of Apple in 2014, but for the iPad Mini, which when combined with other new customers is expected to more than double mobile device shipments.… More

AAC Technologies Transforms from Hare to Tortoise

March 27, 2014
AAC Technologies is still growing, albeit slower than the past. It's suffering from Apple's slowdown and intensified competition among suppliers. However, new opportunities for acoustic products await among the China smartphone brands and in new product segments such as optics, antennas, and ceramics.… More

Pegatron Left with Apple Crumbs

March 25, 2014
Pegatron's 4Q13 results were slightly above expectations, although it guided for a weak 1Q14. Although, a chance exists that Pegatron could benefit from the launch of the iPhone 6 in 2014, its standing within Apple is unclear and unconfirmed reports persist of new suppliers entering the Apple food chain causing competition to intensify.… More

Tencent Shows Facebook How it’s Done

March 21, 2014
Tencent's 4Q13 results were in-line with expectations. More importantly, it revealed how its new O2O ecommerce and mobile advertising initiatives are making fast inroads, and will emerge as the new drivers of its future growth over the coming years. From what Tencent is doing with WeChat, it's clear why Facebook bought WhatsApp.… More

Sunny Optical Keeps Emerging Markets in Focus

March 17, 2014
Sunny Optical surprised the market with better than expected margins in 2H13, as gross margin rose to 17.4% from 15.8%. Although, the market wasn't given much of a window into what's to come in 2014, the proportion of 8MP lenses and modules is expected to rise, supporting margins as shipments are driven higher by the rising adoption of smartphones in China and across emerging markets.… More

Company/Strategy Reports

2Q14 Strategy: The Road to One
April 21, 2014
The tech food chain is gearing up for Apple's latest bushel of new products, which according to whisperings out of Asia have the potential to reorganize both the mobile and PC market. At the same time, the smartphone market is grappling with its new slow growth reality.
Model Portfolio - 1Q14
April 19, 2014
ARM Sells More of Less
February 7, 2014
ARM's end markets continue to grow quickly in unit terms, but the average value of semiconductor content per unit is falling causing ARM's royalty growth to decelerate rapidly. Although solid earnings growth awaits driven by the continued growth of mobile and non-mobile devices, including the internet of things, the counter warrants a lower valuation more suitable for its slowing growth prospects.
GTI’s 2013 Year in Review – Smartphones Jump the Shark
January 3, 2014
21 longs were up 30.1% since initiation with an average holding period of 316 days and an annualized return of 41.5%, and 18 shorts were down 6.9% since initiation with an average holding period of 358 days and an annualized return of up 10%.
CES 2013 – Six Major Trends Emerge
January 17, 2013
The show had a noticeably sleepier feel than last year, with seemingly less attendees and exhibitors. Even so, six major trends for 2013 emerged including rising resolutions, touch everywhere, W8’s latent potential, the return of integrated mfrs, Intel’s challenges, and HTC’s absence.
21Vianet Soars through the Clouds in China
November 29, 2012
In 2011-2016, internet data traffic in China is forecast grow 5.8-fold, posting a CAGR of 42%. As the largest carrier-neutral operator of data centers in China, and now moving into cloud services with the help of Microsoft, 21Vianet is in the sweet spot of China’s internet growth.
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Model Updates

Apple Model Update
April 24, 2014
Raising FY14 and FY15 net income by 1.0% and 8.7%,
ARM Model Update
April 23, 2014
2014 and 2015 EPS lowered by 1% and 5.6%.
Samsung Model Update
April 10, 2014
2014 EPS raised 3.6% to KRW 200,779. 2015 EPS introduced at KRW 196,170.
Micron Model
April 4, 2014
FY14 and Fy15 EPS forecast at US$2.13 and US$1.92.
Sunny Model Update
March 17, 2014
Revising 2014 and 2015 EPS to HKD 0.67 and 0.80.
21Vianet Model Update
March 7, 2014
2014 adjusted EBITDA lowered by 2.5% to RMB 581.2mn.
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