FNSR Finisar VCSELs - A Billion Dollar Opportunity With Apple's Investment to Speed it Along

Finisar (FNSR charts) VCSELs represent a ONE Billion Dollar opportunity now backed by Apple's (AAPL) investment to speed it along.

Loading up during this period of weakness, especially while under $20, worked out great for me and my subscribers! 

It is nice when one sends an email from his phone when the market opened saying he's pleased with the buy at $17.55 earlier this month (when I had a buy at $17.50 that I used cash in my ROTH to fund.) 

From Apple: Apple awards Finisar $390 million from its Advanced Manufacturing Fund

• Award Will Create 500 High-Skill Jobs at Sherman, Texas Facility
• “VCSELs power some of the most sophisticated technology we’ve ever developed and we’re thrilled to partner with Finisar over the next several years to push the boundaries of VCSEL technology and the applications they enable,” said Jeff Williams, Apple’s chief operating officer. “Technology is only as good as the people behind it, and Finisar is a company with a long history of putting its employees first and supporting the community it’s a part of. We’re extremely proud that our involvement will help transform another American community into a manufacturing powerhouse.”

This is a very similar deal to how Apple gives money to Foxcon to make their iPhones. 

To me, I believe Apple wanted a PR win with President Trump to show it is investing in manufacturing in the US and not just China.

Finisar is building in Texas to keep the technology in the US but in a low tax state not in the Silicon Valley where its headquarters is located.  If CA didn't have such high taxes, we might see this plant built up near Redding CA, just below the Shasta Dam where getting low cost renewable electricity would be easier than in Texas.

Market measured in Billions of Dollars:

Simon Leopold - with Raymond James:

The other thing I wanted to ask about is really from an industry perspective, your view of the addressable opportunity for the 3D sensing. So, not specific to what you think you are necessarily going ship but help us understand how you are sizing the market opportunity in 2018? And presumably, I want to ask about 2019, since given the timing of the ramp of the new facility, I have to imagine you are thinking about 2019 already.

Jerry Rawls - Finisar Chairman and CEO:

3D sensing is essentially gigantic. If all the customers and the consumer space and the automotive space really build systems and deploy them as they are -- they have indicated to us recently, then, no matter how big this building is that we just bought, and fill it full of equipment, it’s unlikely that we can supply all of the demand that we’ll need to supply. So, I mean, it’s measured in billions of dollars and it’s really hard to project today that how many of these applications are people really going to field. But, I’ll just tell you, we are building arrays for a lot of different people in both mobile and in automotive, some of them are quite small arrays and some of them are gigantic arrays, so.

Source:  Dec. 7th Earnings Conference Call Transcript

Recent (earlier this month) emailed BUY ALERT to subscribers:

My best buy was near the very bottom of the worst bear market since the Great Depression:

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Update 12/13/17 at 11:38AM PST:  SEC FORM 8-K

Item 8.01 Other Events. Questions have arisen regarding news reports of Apple Inc.’s (“Apple”) announcement this morning regarding a $390 million award to Finisar Corporation (“Finisar”). Apple has not made a debt or equity investment in Finisar. The amount referred to by Apple represents anticipated future business between the companies over a period of time.

iPhone 10 X Material Cost vs Samsung Galaxy S8

Teardown engineers at IHS Markit (Nasdaq: INFO) report the model A1865 version of the new Apple (AAPL) iPhone X (iPhone Ten) smartphone with 64 gigabytes (GB) of NAND memory carries a bill of materials (BOM) of $370.25.  With its $999 price tag, the materials make up 37% of the phone's cost with the remainder for items such as manufacturing, marketing and profits.

Samsung's Galaxy S8 with the same 64GB of NAND memory carries a BOM of $302 and full retail price is $720.  At $720, the $302 BOM is 42% of the phone's cost.  I bought my S8 a few months ago at Costco (COST) for $600 and got a $50 gift card this month which lowered the final cost to $550.

Click images to see full size

Apple price graph showing open gaps

More AAPL Charts

If Samsung hasn't lowered their BOM for the S8, then at my $550 final cost is 55% of the total compared with 37% for Apple. 

With a 5% to 18% higher profit margin due to its lower BOM as a percentage of retail price, Apple is clearly positioning its phone as a "status symbol" to take advantage of its popularity while it can.

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Apple Haircut - Finisar Success

This morning I had a nice chat with the gals who cut my hair. The older one was in disbelief that I'd own stocks at "such high prices." I reminded her that two years ago they all loved Apple and I warned them I liked other stocks like Finisar... that is now up a decent amount.

I came home, ate lunch and looked up when I wrote those Apple articles:

• April 12, 2012: Apple's Valuation Is Good, But Are The Assumptions Correct?
• March 27, 2012: Apple, Is The Bandwagon Full? Consider Finisar

That was over two years ago!!! Time sure flies!!!!

So, I guess the good news for us longs is so many in the public get sucked into the hot stocks at the top just before they crash and it keeps them timid....

Right now we have the latest "hot stocks" that replaced Apple in the public's list of "must own stocks": FB, TWTR, Tesla, etc..... all having issues while the smart money owns the good stocks and collect dividends to spend and/or reinvest.

BTW, since I wrote the last article recommending Finisar at $17.50 over Apple at $633

• Finisar is up 49% to $26.10
• Apple is down 6% to $592

For more information, see:

• Charts & Quote for Apple
• Charts & Quote for Finisar

Apple vs Finisar April 12, 2012 through today

Will Google Build Server Chips & Threaten Intel's Profitable Business?

Today for smart, young adults just out of school Google (GOOG) is a great place to work much like HP (HPQ) was 35 years ago when I was hired. Back then, I went to HP to design semiconductors for the Optoelectronic group (OED). HP used its own chips in many of its own products. The group I went to invented the LED for their first calculators  released when I was in high school and the 1977 HP01 watch, released when I was at UC Berkeley studying electrical engineering and computer science.  

These advance products were part of what inspired me to study semiconductor engineering. 

(I get a kick out of how Apple(AAPL), Google and Samsung are still talking about getting regular folks to dress like geeks with wearable computing technology invented by HP and released as a product in 1977!) 

OED grew and spun off OCD (Optical Communication Division) where I designed fiber optic transceivers and later infrared (IrDA) transceivers when Bluetooth and WiFi were still too expensive so the industry used light to communicate wirelessly between devices.

• My patent " Infrared receiver with variable input resistance for optical communication systems"

Later chips went into HP computers and later PCs. Eventually, it was not cost effective so we sold the unit (mostly R&D) to Intel. One of my friends and neighbors still works at Intel designing advanced processes. I speculated that this was "cyclical" and eventually some companies would want more control of the chips and not rely on Intel or TSMC and bring both design and manufacturing back in house.

From Wall Street Breakfast at Seeking Alpha:

Intel threatened as Google mulls creating own server chips. Google ( GOOG) is reportedly thinking about designing its own server processors using technology from ARM Holdings ( ARMH). The idea is that with its own chips, Google could better manage the interaction between hardware and software. The move could hurt Intel ( INTC), which earns over 4% of its revenue from the search giant, and which has a 95% share of the market for server chips that use PC processors.

It is interesting that Google is now so big that they are contemplating doing their own chips. Will they also build their own fabs or have UMC, TSMC, Samsung or even Intel build the chips for them?

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Apple’s Market Cap $500 Billion

Today Apple (AAPL Charts and Quote) officially joined the very select list of six companies who have had their market  break the $500 billion mark. Market Cap is short for "Market capitalization", defined as the number of shares outstanding by the selling price per share.


Below are excerpts and some new commentary to go with my full article:

Apple's Market Cap Breaks $500 Billion Barrier; Can It Keep This Where All Others Have Failed?

The first five to break into this list are Microsoft, Cisco Systems, Intel, GE and Exxon Mobil.
ExxonMobil broke the $500B mark in 2007 when the price of oil soared to $147 per barrel. The others reached this mark during between 1999 and 2000 during the technology bubble.

The CNN says "Apple's valuation is now higher than the gross domestic product of Poland, Belgium, Sweden, Saudi Arabia, or Taiwan."


Update Feb 29, 2012 after submitting article to Seeking Alpha:  


On Today's CNBC "Fast Money" they gave the following statistics for other stocks that first hit $500B

Company	Date	P/E	Profit Margin
Apple	Today	11.54	28.2%
Microsoft	Q2 2000	22.6	9.15%
GE	Q4 1999	47.9	9.51%

Update March 1, 2012:  Read my full article at:

Apple's Market Cap Breaks $500 Billion Barrier; Can It Keep This Where All Others Have Failed?

Apple is certainly profitable and their products are in high demand.

Steve Jobs’s Resignation Letter to Apple

On August 23, 2011 after the stock market closed, Steve Jobs resigned as CEO of Apple (Apple charts and Quote) Inc. Apple's stock close Aug. 23 at $376.18. The next day, Apple stock opened at $365.08, down 2.95%.  Below is the Steve Job's letter to Apples board of directors. (Source Apple Press Info)

August 24, 2011

Letter from Steve Jobs

To the Apple Board of Directors and the Apple Community:

I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.

I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.

As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.

I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.

I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.

Steve 

Here is a chart showing the performance of Apple's stock year-to-date. 

click chart for full size image 

More Apple Charts and a stock quote 

I'd like to wish Steve Jobs the best of luck in his new, reduced roll at Apple and hope his health improves so he can enjoy and long and happy life.

ARMH: Jim Cramer likes Arm as "The Next Intel"

Update 7/29/13:

• Jim Cramer's "Action Alerts Plus" Charitable Trust Portfolio Performance: 2013

Calling ARMH "the next Intel" Jim Cramer Likes Arm Holdings

Yesterday on Jim Cramer's Mad Money TV Program Cramer called Arm Holdings (ARMH Charts) "the next Intel" (INTC Charts) because its microprocessors are more energy efficient than Intel's. Cramer said ARMH is in 95% of all smartphones and MP3 players. Jim said Arm gets 75¢ in royalties for every iPad sold which makes it a great play on Apple (AAPL Charts).

Click chart for full size image courtesy of stockcharts.com

What Cramer didn't say is they are "more energy efficient" because they are slower and don't do as much. The new Intel "core i7" powered desktop computer I am writing this on has hyper threading and four cores so it effectively has eight processors working at the same time on up to eight different tasks. Of course this will use much more power than an MP3 player that just plays one song or video at a time.

Mariam Metsinger reported:

Arm Holdings had an amazing analyst day last month when it reported its total addressable market is expected to double to 29 billion chips in 2014 from 15 billion in 2009. The company could get significant pin action from Microsoft (MSFT charts), as its next generation of Windows is likely to operate on ARM-based processors. ARMH is also diversified into other areas, and its technology is used in sensors, smart meters and hard drives.


While ARMH's multiple is 31, this is reasonable, considering its growth rate is 22%. Cramer would buy the stock when it pulls back 2 points from where it was Monday to $10.

A PE of 31 with a growth rate of 22% is a PEG of 1.4.   I would not call it "a good value" (good value is when growth rate exceeds PE for a PEG under 1.0) but this PEG is not "unreasonable"  as long as growth continues above 20%.  It is easy to grow a small market but once it is large, growth slows as others want a piece.

I would think once the market is large enough, Intel could enter with its own low power chip such as its low cost Atom processor now used in low cost netbooks. Also, as the market matures, Apple could design their own chips and have them made at a foundry so they could keep the profits themselves rather than give them to ARMH. In fact, I would not be surprised to see Apple eventually go to a foundry build their own chip around Intel's atom processor where I believe the license fee to Intel could be less. They may use this to pressure Arm to lower prices. One thing for sure, it can be dangerous investing in companies with few products and customers as a large customer could go elsewhere for lower prices or more performance.

Finally, as users demand more functionality and multitasking from their portable devices, this will favor Intel and AMD with their multiple processors on a single slice of silicon. As the market for these devices get large enough for Intel to notice, I expect to see Intel (and probably AMD) release versions of their microprocessors optimized for low power rather than blazing speed. ARMH may continue to do well for years, but it is not without its risks.

More information:

• Arm Holdings, plc: ARMH Charts
• Apple: AAPL Charts
• Intel: INTC Charts
• Microsoft:  MSFT Charts
• Jim Cramer Fan Club
• Mariam Metsinger: Cramer's Mad Money - The Next Intel

Disclosure:  I own Intel and Microsoft in my personal portfolio.  I purchased Intel and Microsoft in 1993 at $3.67 and $2.43 per share, respectively.  I also cover both in K"irk Lindstrom's Investment Letter" and currently hold positions in both for the "Explore Portfolio."

Incremental Apple iPhone 3GS Leads Video Revolution

Doubled Money in a Down Market!

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 104% (over a double!) vs. the S&P500 DOWN 11% vs. NASDAQ down 17% vs. Warren Buffett's Berkshire Hathaway (BRKA) ONLY up 24% (All through 6/21/09)
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Apple (Charts of AAPL Stock) launched the iPhone 3GS Friday. Customers lined up outside stores to get this new version of Apple's popular smart phone. Most lines were shorter than the initial launch of the iPhone, but many locations around the US reported selling out. I tried this phone out earlier today.

The "S" in iPhone 3G S stands for speed. Apple promises the new phone is faster than the first two versions. The 3G-S comes in two versions with a required 2-year contract with AT&T.:

1. one with 16 gigabytes of memory for $199 and
   
2. one with 32 gigabytes for $299,
   

Apple and AT&T say user applications should open faster and internet pages should load more quickly with the increased memory and the new software.

The new phone has:

• Improved speed, "up to 2x" faster.
  
  • It still felt too slow to me compared to other smart phones I've tested, especially loading this blog. Perhaps this was AT&T's fault for poor coverage. My regular cell phone on AT&T's Cingular network often has trouble getting an open line at this location.
    
• an upgraded 3-Megapixel camera with built-in autofocus
  
  • We took a picture in difficult lighting and emailed it over the internet this AM. It was so easy to do it blew me way. The camera automatically reduced the resolution of the photo so it looked good on the receiving end with only a 91KB file size!
• The ability to capture and edit VGA video in either portrait or landscape mode.
  
  • We shot a short video documenting us testing smoke detectors in all rooms of a house we are selling to show we meet CA law. The camera had no trouble adjusting to lighting in dim hallways to bright bedrooms. Amazing performance for secondary feature.
• Voice control for contacts and music.
• A built-in digital compass that can automatically reorient maps to match the direction you’re facing.
  
  • Valuable if it allows you to not have to own a separate GPS device.
    
• Cut, copy and paste between applications. Upload them to the web also.
• Keyboard operates in landscape mode for larger key pads as well as original portrait mode.
  
  • A nice upgrade but some of us are still used to real keypads.
• Internet Tethering. You can share the 3G connection on your iPhone with your Mac notebook or PC laptop. This feature is currently not available in the US.
  
  • I'd buy the phone if it gave me the same speed as my hard wired DSL connection for the added price of what I pay for DSL. That would allow dropping DSL at no extra cost. Perhaps AT&T will have tiers with $30 data plan the slow, low bandwidth version and charge more for internet tethering and nearly unlimitted use. Of course, someone will abuse it watching videos so I don't think I'll replace my DSL land line anytime soon.
    

I heard radio interviews with people at Apple stores. Many said they wanted the phone so they can take, edit and upload videos to the internet like this powerful video from Iran:

Powerful Video Poem from the Rooftops of Iran

People are paying a premium to have a voice. To be heard. Sometimes, as the video from Iran shows, what they say, despite amateur production, is quite moving and powerful.

Revolution is in the air and Apple's new iPhone 3GS makes it easier to be a revolutionary!

Charts of Apple Stock Price

Disclaimers: None. I have no position in Apple or AT&T stock. I prefer to invest in those who will help them deliver better service so web pages and videos don't take so long to load compared to DSL over land lines.

Doubled Money in a Down Market!

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 104% (over a double!) vs. the S&P500 DOWN 11% vs. NASDAQ down 17% vs. Warren Buffett's Berkshire Hathaway (BRKA) ONLY up 24% (All through 6/21/09)

As of June 21, 2009, "Kirk's Newsletter Explore Portfolio" is up 5.0% YTD
vs. DJIA DOWN 2.7%
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Sunpower, First Solar and Apple Computer: Top Picks from Hilary Kramer

Thursday night on NBR, Hilary Kramer, Market Strategist & Author of "Ahead of the Curve: Nine Simple Ways to Create Wealth by Spotting Stock Trends" said she thought the bottom was in (DJIA closed at 12,270.17) and she saw value in the tech group where she recommended Sunpower (SPWR=74.25), First Solar (FSLR=164.74) and Apple Computer (AAPL=139.07).

KRAMER: Yes, Paul. I believe we have seen the bottom and we are going to now see a bull come back into Wall Street. We have formed a bottom and the reason we know that is that we finally had real buyers come in today. But we know it even more so because of what I saw this morning and yesterday, which is real fear. Fear took over and it over powered greed. Greed for so long was fueling the market, including as it was going down people buying into it.

KANGAS: Huh-uh.

KRAMER: But once that pessimism, a rational pessimism took over and the last of us capitulated because that's what Wall Street waits for. They wait for the very very last person who's holding onto their stock to give up and to sell and that's when the Street turns around and surprises you.

KANGAS: OK so a bottom we have seen. We might test it a couple of times, wouldn't you agree?

KRAMER: Absolutely. We may be testing and we'll be testing certain sectors.

To Paul Kangas's question "Where do you see value among the tech group?"

KRAMER: That's a great question, Paul. What I have been looking at are the solar technology companies. In particular there's a company called Sunpower. The ticker symbol is SPWR and it is off 50 percent from its high which was only a few weeks ago. Now Sunpower is reporting before the bell tomorrow and we could see Sunpower have some great guidance. If they say that there's a lot of demand out there for their solar modules and if that's the case, the whole solar sector may rise.

KANGAS: What else shines in your mind?

KRAMER: OK another solar stock, a different one called First Solar (FSLR) and it's a different technology, thin film technology, very efficient form of solar. And First Solar is also off 45 percent since December. It's unbelievable what has happened to these stocks because of momentum buyers became momentum sellers and shorters. So if Sunpower goes up, we will see First Solar go up.

KANGAS: Very briefly one more. We have less than a minute.

KRAMER: I would like to talk about Apple (AAPL). This is very important, because as we know, Apple was $202 just recently and it closed today at $139 and it tested $126. I may go back into Apple. But what happened there is Steve Jobs is very conservative in giving guidance. But the key is, they are going to make inroads into the PCs because they can convert iPod users into desk top users and lap top users.

KANGAS: OK. Hilary, do you own any of the stocks mentioned?

KRAMER: Yes, I own First Solar. And Sunpower I do intend to buy tomorrow morning if the earnings come out strong.

Summary & quotes from Yahoo! Finance

Point and Figure Targets for

• FSLR: Bearish Price Objective of $164 met.
• SPWR: Bearish Price Objective of $92 met and it continues to plunge lower to next support level indicated on my graph above.
• AAPL: Bearish Price Objective of $142 met.

Click charts for more info:





Disclaimer: I have no position in any of these stocks and have no plans to buy them at these valuations. (PE for AAPL=29, SPWR=370 & FSLR=125) I have been buying different tech stocks with PEs under 15.

Discuss this article at "Value and Growth Investing" in our facebook group called "Investing for the long term."