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HEXUS.sharewatch: mobile chip stocks continue to suffer

by Scott Bicheno on 14 March 2011, 12:42

Tags: NVIDIA (NASDAQ:NVDA), ARM, Qualcomm (NASDAQ:QCOM)

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Most of our stocks went down a bit last week, and that's probably down as much to events in Libya, Japan and the periphery of Europe as anything else. But within those falls, ARM and NVIDIA continued their plunge of recent weeks and were joined by Qualcomm.

The thing these three companies have in common, of course, is mobile chips, so it's fair to infer that investors cooled on mobile chips last week. Once more there were no specific events to explain these falls, so we figure they're indicative of the continued deflation of a speculative mobile bubble that was catalysed by the hype around Android Honeycomb tablets at the start of the year.

ARM designs many of the chips found in mobile devices, while NVIDIA's Tegra 2 chip is the default for Honeycomb tablets and Qualcomm is the mobile chip market leader. There were many analyst reports at the start of the year predicting above-expectation growth for the tablet market, and pretty much all mobile and PC OEMs were resolved to enter the market, having onserved the popularity of Apple's iPad.

But this speculative euphoria soon subsided as feats of a ‘tablet glut', in which over-optimism led to too many components being manufactured, grew. This fear became especially strong after Apple launched the iPad 2, despite it not delivering anything too surprising.

To us, the over-reaction to the launch of the iPad 2 is symptomatic of a speculative bubble. There was probably an underlying feeling that some stocks, such as ARM and NVIDIA, were overvalued, but as with all bubbles, nobody wanted to miss out on the action. The iPad 2 has been a splash of cold water in the face of the more hysterical speculators, and mobile component shares have fallen accordingly.

 

Company Listing Share price 21/2/11 Share price 28/2/11 Share price 7/3/11 Share price 14/3/11 7-day change Market cap (bn)
AMD AMD 9.18 9.29 9.23 8.65 -6.3% 5.93
Apple AAPL 350.56 348.16 360.00 351.99 -2.2% 324.28
ARM ARMH 30.48 30.11 29.24 25.75 -11.9% 11.55
Avnet AVT 36.97 34.49 34.18 33.18 -2.9% 5.07
Cisco CSCO 18.85 18.64 18.40 17.95 -2.4% 99.23
Dell DELL 15.43 15.13 15.60 15.28 -2.1% 29.49
Google GOOG 630.08 610.04 600.62 576.71 -4.0% 185.43
HP HPQ 48.67 42.68 42.61 41.73 -2.1% 90.74
IBM IBM 164.84 162.28 161.83 162.43 0.4% 198.09
Ingram Micro IM 20.39 19.98 20.05 20.11 0.3% 3.19
Intel INTC 22.14 21.86 21.56 20.87 -3.2% 114.53
Microsoft MSFT 27.06 26.55 25.95 25.68 -1.0% 215.77
Nokia NOK 9.19 8.65 8.49 8.49 0.0% 31.79
Nvidia NVDA 25.63 23.12 20.75 18.05 -13.0% 10.49
Oracle ORCL 33.68 32.95 32.76 31.91 -2.6% 161.22
Qualcomm QCOM 59.19 59.02 58.15 53.61 -7.8% 88.12
Tech Data TECD 51.20 49.80 50.12 49.18 -1.9% 2.29
Dow .DJI 12391.25 12130.45 12169.88 12044.40 -1.0% N/A
FTSE 100 .FTSE 6086.09 6001.20 5990.39 5828.67 -2.7% N/A
NASDAQ .IXIC 2833.95 2781.05 2784.67 2715.61 -2.5% N/A

 



HEXUS Forums :: 2 Comments

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Do Arm pay dividends?
What online trading websites do you recomend for trading newbs?
Try share.com, we used it in a school investor thing and I used it later to actually buy shares in ARM for myself (netting a cool profit :) although I did sell too early) The shares I bought paid a small div.
Share.com let you use practice accounts and is easy to use if you are new to it. I used their DIY ISA so my shares were tax free.
However, there is a monthly fee (£5? cant remember) and if you are only investing a small amount it's probably not worth it.