The State of Electronics IP in a volatile Economy

That the situation had deteriorated to this point was a triumph of misguided zeal, ignorance, and greed that has infected one of the two principal US political parties in the last decade. Yet whenever in recent years this writer deigned to even hint at a warning of how that political party’s influence was damaging the economic environment in which not only the Electronics Industry but all citizens must operate, a few readers objected. It would now appear that more participation of the press was warranted, not less, given the mess that was created in the following years.

Most recently, by the afternoon of August 2, 2011, after a “deal” on the debt ceiling had been reluctantly reached, we saw statements in print like this, “The Dow Jones Industrial Average (DJI:DJIA) fell 265.87 points today (August 2, 2011), or a loss of 2.2%, to 11,866.62, its worst one-day loss since June 1, 2011. The recent eight-day losing stretch was the longest since October 2008, just weeks after the collapse of Lehman Bros. and by some measures, the peak of the US credit crisis.”

So Table 3 was further extended to August 5, 2011, all for just the Electronics G5 IP vendors. [Note: August 5 was just after MIPS had reported its Q2 2011 numbers, but more importantly, it was after a small group of congressmen had blackmailed the entire Congress into accepting onerous terms to finally OK a rise in the US debt ceiling].

But August 5 was just before the S&P lowered its credit rating of the United States from AAA to AA+, the first time in the history of the country this has occurred. By the way, the S&P credit rating company went out of its way to put the blame for its decision onto the group where it rightly belongs—the same small group of House congressmen who practiced “political brinksmanship” in the debate over the debt ceiling. Further, the S&P said that “the majority of one of the two major parties continues to resist any measure that would raise revenues,” such as elimination the George W. Bush tax cuts for the rich now 10 years in effect.

Has the recalcitrant group been chastened by the calamity they have wrought? Of course not! These same individuals continue to distort history, blaming the current president for his “poor leadership” for the last two years, a lie that typifies their radical agenda, and ignores the previous president’s record of eight years of tax cuts for the rich, two voluntary wars, two deep recessions, a housing crisis and a Wall Street meltdown, the second recession being the very one from which the current president is trying to help the country recover.

For what it’s worth, the writer is none too pleased with the leadership being exhibited by the current president, either. Long before the debt ceiling issue reached a crisis state, he should have been out alerting the people of the country about how radical and stubborn the far right wing was, and he should have alerted the public and gained support for using the 14th Amendment to raise the debt ceiling rather than “negotiate” with congressional neophytes who had signed a “no new revenue pledge.”

More importantly, he should have been out using his not inconsiderable communications skills to attack the chronic unemployment still leftover from the 2007-2008 recession. The president should have been and still should be galvanizing the country with Roosevelt-like fixes.

Paul Krugman this week said it well: “What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems.”

This situation is going to worsen. The country has a lot more to fear from these radicals, making most of us nostalgic for the days when “fear itself” was all we had to “fear”.


Returning our attention to the Financial Reports


Going back to the actual financial performance of the Electronics IP G5 for a moment, we recall that Table 1 far above exhibited revenue numbers for Q2 2011 and the three prior quarters, listing each of the G5 Electronics IP vendor's revenue results for each of those quarters. Table 2 gave earnings numbers for Q2 2011 and the three prior quarters, listing each of the G5 IP vendor's earnings results for each of those quarters.

To gain a side by side comparison of all five vendors, in a format which lists both the Stock Prices and Market Caps, we present Table 3 just below. After each time period, the percentage the later Stock Price increased over its predecessor is listed in two-digit bold black font. If the Stock Price decreased over the period, the percentage is displayed in two-digit bold red font.

Notice in Table 3 that the stock prices (and market caps) of both ARMH and RAMBUS increased slightly between June 03 and July 29, while the other three vendors endured small, single digit erosions of their stock prices over that 55 day period.

However, by July 29, the aforementioned debt ceiling controversy was well underway, with increased stock market volatility, and the IP G5 vendors lost between 7.5% and 42.62% on their respective stock prices during the five days between August 01 and August 05 alone. The entire NASDAQ COMPOSITE INDEX fell over 8% during those same five days.

 

 


Stock Graphs for the IP G5 between July 29 and August 5, 2011

 

ARM Holdings, plc

 

 

 

CEVA, Inc.

 

 

 

MIPS Technologies, Inc.

 

 

 

MoSys, Inc.

 

 

 

Rambus, Inc.

 

 

 

NASDAQ Composite

 

 

 

Late Breaking NYSE News August 8 afternoon

The Dow Jones industrials fell 634.76 points today Monday August 8, the first trading day since Standard & Poor's downgraded American debt. It was the sixth-worst point decline for the Dow in the last 112 years and the worst drop since December 2008.

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