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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

Sunny Kicks Lenses into High Gear

September 19, 2014
Sunny Optical posted a mixed August with camera modules down 6.4% MoM but camera lenses up 34% MoM. With 4Q14 expected to see a pick up in LTE handset production in China and internal lens usage coming form a low base, Sunny now looks on track to meet its full year lens target of shipments doubling.… More

Microsoft Gains Macro Perspective, iPad on Launch Pad

September 17, 2014
MSFT raised it's dividend by 11%, although the market seemed disappointed. Longer term, new CEO, Nadella's strategy of "mobile first, cloud first" exhibits that MSFT has gained some perspective on where it should position itself in an OS agnostic software world. Unconfirmed reports are circulating that Apple will launch its new iPads and OS X Yosemite in October.… More

VNET Strikes Back

September 15, 2014
Today, VNET issued a 91 page rebuttal to Trinity's allegations of fraud and deteriorating fundamentals. In addition to a careful examination of VNET's business, numerous photocopies of financial statements, licenses, and other supporting documents were provided, all of which will go a long way to restoring investor confidence.… More

VNET Drowns in Muddy Waters, Compal Composed, TSMC’s Apple a Day

September 11, 2014
In classic Muddy Waters style, VNET took a pie to the face from Trinity Research and tanked on allegations of accounting fraud. VNET immediately responded and  categorically denied the accusations. If VNET can exonerate themselves, the stock is now cheap. Compal and TSMC both reported August revenue which puts them on track to meet or beat 3Q14 guidance.… More

Apple is New All Over Again – Let it Ride

September 10, 2014
Although not much which came out of Apple's new product launch was truly unknown, with the addition of Apple Watch and Apple Pay the future is once again unknown as much depends on the adoption by third party developers, banks and merchants. With a strong quarter coming on the back of the iPhone 6, and two new areas of potential growth now in the picture, the share price will benefit from what the market can't quantify.… More

Mediatek Aims High, Largan Early in Ramp, Novatek Over the Top

September 5, 2014
Mediatek, Largan, and Novatek all posted strong August revenue which is likely to extend into September as inventory is built in China in advance of the Golden Week National Day holiday on October 1-7.… More

SPIL & ASE Diverge Like Two Roads in a Yellow Wood

September 4, 2014
SPIL's August revenue was down MoM, although from what was said on the 2Q14 call is likely to pick up again September. Seasonally, SPIL is weak in 4Q where ASE usually is strong due to its high exposure to Apple, which SPIL lacks. As with most of tech in 2H14, the winners are those who managed to climb into the Apple tree.… More

Sunny’s Modular Margin Deterioration

August 20, 2014
Sunny's July shipments cooled off after a blistering June. Although 1H14 net income was in-line with expectations, operating profits fell short due to an alarming drop off in module margins. Although, Sunny remains sunny about margins recovering as resolutions rise in 2H14, it hasn't helped so far.… More

Lenovo has Upward Mobility

August 15, 2014
Lenovo surprised the street with stronger than expected profitability in its mobile business in FY1Q15. With PCs strong, and the Motorola and IBM server business on-track to close by year end, multi-year earnings growth now looks assured.… More

Compal Makes Lite of Being Light

August 13, 2014
Compal's 2Q14 earnings came in about in-line with the street although slightly shy of GTI's forecast due to gross and operating margins which were a little light. Somewhat strangely, Compal hasn't addressed the press or the investor base about results or guidance, potentially raising a red flag. Despite this, top-line growth remains on track and margins still have the potential to improve as the sales mix continues shifting.… More

Catcher Rides Bucking Apple Bull

August 11, 2014
Catcher smashed consensus with gross margins which beat by almost 700bps on high utilization and favorable pricing. Looking into 2H14, the street was already expecting strong top line momentum, but with the better than expected 2Q14 margins, forecasts for full year 2014 are likely to go up.… More

Compal’s Down Still Up, TSMC Preps for Holidays, Asus Gets on Phone

August 8, 2014
Compal's July revenue inflected down from a high base in June, but Compal reiterated its 3Q14 notebook guidance and said August and September will both be up. TSMC showed signs of beginning the holiday ramp with a strong July which was in-line with its guidance. Asustek's July was somewhat stronger than expected on smartphone shipments up 30% MoM. However, with total smartphone shipments still small, they'r unlikely to add much to profitability.… More

Company/Strategy Reports

TSMC Meets the Fruit Ninja
July 18, 2014
Comments out of TSMC and ASML have clouded the outlook for foundry growth and brought into question TSMC's Apple business beyond the A8. With utilization set to peak in 3Q14, and inventory at or above seasonal levels, 2014 will be a hard act to follow next year.
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.
More Inside …

Model Updates

Sunny Model Update
September 19, 2014
Raising 2014 and 2015 EPS 8.0% and 3.4% to RMB 0.54 and RMB 0.60.
VNET Model Update
September 11, 2014
2014 and 2015 adjusted EBITDA lowered 4.8% and 5.2% to RMB 598 and RMB 996.
Apple Model Update
September 10, 2014
Raising FY15 EPS to US$7.08
Sunny Model Update
August 20, 2014
2014 and 2015 EPS raised by 4.8% and 1.7% to RMB0.50 and RMB0.58.
Lenovo Model Update
August 15, 2014
Raising FY15 EPS 1.6% to HK$0.76 and introducing FY16 EPS at HK$0.91.
Compal Model Update
August 13, 2014
2014 and 2015 adjusted EPS lowered 7.4% and 2.7% to NT$2.23 and NT$2.59.
More Inside …