Nvidia shares dip as investors eye mobile chips

Nvidia shares dip as investors eye mobile chips

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Investors focused on slower-than-expected growth in chipmaker Nvidia Corp's (NVDA.O) mobile business following strong quarterly earnings and sent its stock lower.

Nvidia's shares were up 11 percent on Friday after the Santa Clara, California company's forecast beat expectations late the day before, but the stock later lost its gain and was down 5 percent.

Many investors have turned to Nvidia because of its Tegra mobile processors for tablets and smartphones unveiled this year. But the Tegra business will be "steady as she goes" while Nvidia's other business segments will grow in the current quarter, Chief Executive Jen-Hsun Huang told analysts on a conference call on Thursday.

Some expected Huang to be more upbeat about Tegra's pace of revenue growth. Tegra sales are small now, but are expected to become a big chunk of Nvidia's business.

"Investors just assumed the product was going to ramp of its own accord. In fact, Nvidia is really beholden to its (manufacturing) customers," said MKM Partners analyst Daniel Berenbaum. "Management has not been particularly helpful in providing realistic revenue ramp plans."

Nvidia, whose name is well known to a community of gamers, graphic designers and other high-end users, this year made a splash at the Consumer Electronics Show in Las Vegas, where it unveiled a series of "design wins" -- electronics manufacturers agreeing to use its mobile chips in phones and tablets.

On Wednesday, Nvidia said Samsung Electronics (005930.KS) is using the Tegra in the new Galaxy R smartphone, the first time Asia's biggest electronics firm has used that chip in one of its phones.

Nvidia expects third-quarter revenue to rise 4 to 6 percent from the second quarter, equivalent to $1.06 billion to $1.08 billion.

But Wall Street analysts responded to the quarterly results and outlook with notes with titles like "Show me the Tegra," "Show me the money" and "As many questions as answers."

"We wonder when Tegra finally catches a wave and delivers the robust growth investors had been waiting for -- particularly as the competitive environment intensifies," Evercore analyst Patrick Wang said in note to clients, cutting his price target on Nvidia's stock to $11 from $12.

The stock was at $12.75 on Friday afternoon.

Stifel Nicolaus cut its price target to $25 from $29, citing research and development spending that was higher than its estimates.

Stifel said it continues to view Nvidia as providing disruptive technology in both mobile computing and data centers, and maintained its "buy" rating on the stock.

(Reporting by Siddharth Cavale in Bangalore and Noel Randewich in San Francisco. Editing by Robert MacMillan)

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Hynix shares tumble on new share sale concerns

Hynix shares tumble on new share sale concerns

Stock Market Predictions

SEOUL (Global Markets) - Shares in South Korea's Hynix Semiconductor (000660.KS) tumbled more than 8 percent on Friday to five-month lows amid concerns of a substantive new share sale by the creditors-turned-shareholders of the chipmaker.

Top shareholders of the company plan to launch the sale of their $2.9 billion stake on June 21 and a source with direct knowledge of the auction told Global Markets that they would seek to offer 20 percent of the firm including new share issues.

The shareholders had yet to decide how to break down the portion of existing shares and new share sales, said the source, who declined to be named as a final decision is yet to be made.

Hynix told the stock exchange on Friday it has no plans to issue new shares, but one of its top shareholders reiterated that they were keeping the option open to give potential buyers more choices.

"Our principle is selling a 15 percent stake (held by creditors-turned-shareholders) but we'll consider offering new Hynix shares as well," Ryu Jae-han, chief executive of Korea Finance Corp, a major Hynix shareholder, told reporters.

Selling new shares would give Hynix much-needed cash to upgrade its production facilities and better compete with sector leader Samsung Electronics Co (005930.KS) in a notoriously cyclical industry that requires massive capital investment, but some investors are concerned about diluted earnings.

"Some institutional investors are dumping Hynix shares, fearing new share issue will dilute its earnings per share," said Kim Sung-in, an analyst at Kiwoom Securities.

Ryu said creditors were seeking to launch the Hynix sale on June 21 to take preliminary bids in early July, with the deal likely to close between October and November.

Creditors will consider extending the schedule or relaunching the auction should the deal lure only one bidder.

The latest sales attempt is the third auction in as many years. Previous bids failed to attract strong interest as many fear exposure to the cyclical computer memory chip industry.

So far, Hyundai Heavy Industries (009540.KS), the world's top shipbuilder, is the sole potential bidder interested in the auction.

Hynix shares closed down 7 percent on Friday, after falling as much as 8.2 percent, versus the wider market's .KS11 1.2 percent fall.

(Reporting by Ju-min Park and Miyoung Kim; Editing by Jonathan Hopfner and Vinu Pilakkott)

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Elpida shares jump on bargain hunting

Elpida shares jump on bargain hunting

Stock Market Predictions

TOKYO (Global Markets) - Shares in Elpida Memory Inc (6665.T), the world's No.3 maker of dynamic random access memory chips, gained the most in two years on Friday amid a rise in DRAM spot prices and a view among investors that the stock had fallen too far in recent trade.

The shares, which rose 17.6 percent to 535 yen, had shed more than 40 percent in the month to Thursday's close, battered by Elpida's move to raise $990 million to finance its expansion in cutting-edge chips for smartphones and tablet PCs.

The stock, which hit a 2- year low this week, had seen its 14-day relative strength index drop to 21 as of Thursday, below the 30 line where stocks are deemed oversold.

A trader at a foreign brokerage said that a number of factors were lifting the shares, including Wednesday's news about Abu Dhabi state-owned fund Aabar joining South Korea's STX Corp (011810.KS) to bid for Hynix Semiconductor (000660.KS) and a rise in chip spot prices.

"Heavily shorted Elpida is being bought back on hopes that there will be some changes in the DRAM industry," he said.

The percentage of shares outstanding on loan at Elpida stood at a still-high 7.8 percent as of August 24 at 459 yen, down from a peak of 19.5 percent at the end of July.

Elpida has repeatedly disappointed long-term investors by raising capital and diluting shares to stay competitive against bigger South Korean rivals Samsung Electronics (005930.KS) and Hynix, which have more scale.

To stay relevant, it aims to take the lead in advanced 25-nanometre chips, which pack more power onto each sliver of silicon than existing DRAM chips, hoping to gain an edge in mobile memory used in tablet PCs and smartphones.

Friday's jump was the biggest single-day jump in two years for the chipmaker, which has lost 90 percent since its shares peaked at the end of 2006. Trading volume hit a six-week high.

Weak chip prices have weighed on chipmakers, with even market giant Samsung warning of fragile consumer demand.

Spot prices for DDR3 2Gigabit type DRAM chips were up 3.6 percent to $1.01 in Friday afternoon trade according to DRAMexchange, but analysts say prices are well below cost for many chip makers.

Elpida, like No.2 NAND flash chipmaker Toshiba Corp (6502.T), hopes Apple Inc's (AAPL.O) patent war with supplier Samsung will mean more sales to the maker of iPhones and iPads, sources have said.

(Reporting by Tokyo Newsroom; Editing by Nathan Layne and Chris Gallagher)

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KCC shares jump after $602 million Hyundai Heavy stake sale

KCC shares jump after $602 million Hyundai Heavy stake sale

Stock Market Predictions

SEOUL (Global Markets) - Shares in South Korea's KCC (002380.KS) surged 11 percent after the chemical producer sold 697.2 billion won ($602 million) worth of shares in the world's largest shipbuilder Hyundai Heavy Industries (009540.KS) at the top of its expected price range.

The sale of its 2.49 million shares or 3.27 percent stake in Hyundai Heavy via a block trade follows KCC's planned purchase of a $675 million stake in Samsung's unlisted amusement park operator Everland.

"Our recent stake sales in Hyundai Motor (005380.KS) and Mando Corp (060980.KS) can cover the Everland stake buy. A decision on proceeds from the Hyundai Heavy share sale has not been made yet," a KCC media official said.

The manufacturer of chemical products used in construction, automobile and other industries sold the shares at 280,000 won each, at the high end of a price range offered previously.

Hyundai Heavy Industries (009540.KS) slid 1.5 percent as of 0034 GMT, underperforming other Korean shipbuilders.

Through the stake disposal, KCC reduced its Hyundai Heavy stake to 3.12 percent.

(Reporting by Ju-min Park; Additional reporting by Joonhee Yu; Editing by Yoo Choonsik and Jonathan Hopfner)

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