Hardware Sector: Chips are Down

National: Inventory Woes

National Semiconductor designs, develops, manufactures and markets
semiconductor products. The company reported its Q3 results ending February 25,
2007, with revenues of $431.0 mn, a decline of 14% on a sequential basis from
$501.6 mn in Q2, 2007. The revenue decline, according to the company, was due to
seasonality and inventory reductions in the supply chain as distributors lowered
their inventory balances during the quarter. Also, as projected, National
Semiconductor had approximately $10 mn less in foundry revenues related to
previously sold cordless and super I/O businesses. National's Q3 sales
decreased 21% y-o-y, when the company reported sales of $547.7 mn in 2006. Net
profits stood at $71.5 mn, a decrease of 21.77% q-o-q from $91.4 mn and a
decline of 40.46% on a y-o-y basis from $120.1 mn.

National Semiconductors expects revenues for Q4, 2007 to
increase by 3-6% over Q3, 2007. During the quarter, It acquired Xignal
Technologies AG, a German-based developer of high-speed data converters
developer of continuous-time sigma delta analog-to-digital converters. It also
introduced radio frequency power detector with guaranteed accuracy over
temperature and RF production testing for 3G mobile phone power controls.
National Semiconductor's shares are traded at $24.62.

Texas Instruments: Sales Degrowth

Texas Instruments reported its results for Q4 ending December 31, 2006, with
revenue of $3.46 bn, a decline of 8% from $3.76 bn in Q3, 2006. The
semiconductor segment accounted for 96% of the company's revenues and
education technology accounted for 4% of its revenues. Operating profit stood at
$767 mn, a decline of 17.53% on a q-o-q basis and an increase of 0.92% on a
y-o-y basis. For Q1, 2007, it expects revenue to be in the range $3.01-$3.28 bn.

During the quarter, TI introduced OMAP-Vox single-chip solution
to foster development of multimedia feature phones. Codenamed eCosto, the new
single-chip platform is leveraging TI's DRP technology. TI collaborated with
Certicom and launched Certicom Security for RFID product authentication. In
collaboration with TI, Certicom is using its elliptic curve cryptography to
item-level RFID tag. It, along with Mistral Software, introduced a virtual CD
changer reference design built on the company's Aureus audio digital signal
processors. TI shares change hands at $31.35.

AMD: In the Red

Advanced Micro Devices (AMD) is a global semiconductor company with
facilities worldwide. It has announced the results of Q4, ended December 31,
2006. As a result of AMD's acquisition of ATI, Q4 financial results include
the results of the former ATI operations beginning October 25, 2006. Its Q4,
2006 revenue recorded $1.77 bn, an increase of 33.08% from $1.33 bn in the same
period last year; an operating loss of $527mn, a decline of 355.83% over a
operating profits of $206 mn in the same period last year. These results include
acquisition-related and integration charges of $550 mn, and $27 mn of employee
stock-based compensation expense. For the first quarter of fiscal 2007, AMD
expects revenues to be in the range of $1.6-1.7 bn.

During the quarter, AMD completed the acquisition of ATI
Technologies for approximately $5.4 bn. It also introduced its next-generation
processor codenamed Barcelona, quad-core x86 server processor, in a four-socket
system running 64-bit Windows Server 2003. It signed a Grant Disbursement
Agreement with the State of New York, in which AMD initiates the building of a
new state-of-the-art 300mm wafer fabrication facility in Saratoga County, NY.
Its shares are traded at $13.41.

Sun: Revenues Up 7%

Sun Microsystems reported its Fiscal second quarter, which ended December
31, 2006 with revenues at $3.566 bn, an increase of 7% as compared with $3.337
bn for the same period last year. The y-o-y revenue increase was due to sales of
SPARC chip multithreading servers and x64-based servers as well as the increased
acceptance of the SolarisTM 10 Operating System. Computer Systems products
revenues increased 14% y-o-y, the fourth consecutive quarter of y-o-y revenue
growth. Net profit for the second quarter was $126 mn, an increase of 156.50% as
compared with a net loss of $223 mn, for the same period last year. Net profit
for Q2 included $58 mn of stock-based compensation charges, $26 mn of
restructuring and related impairment of assets charges and a related tax benefit
of $4 mn.

During the quarter, Sun Microsystems and Imation entered into a
distribution agreement, naming Imation the media distributor for Sun's full
line of data storage media for entry-level, mid-range and data-center
environments. The company also announced a new global cooperation with Ericsson
and Nokia to unite the Network Equipment Provider community and assist
telecommunications operators and service providers. During the period, it
launched The Big Mashup, examining how the world of entertainment and
newsgathering is changing as the network blurs the line between audience and
entertainer, viewer and newscaster, and fan and producer. Sun Microsystems
shares are currently traded at $6.2.

HP: Revenues Up 11%

HP, the technology solutions provider to consumers, businesses and
institutions reported moderate sales growth for Q3 ended January 31, 2007. For
the first fiscal quarter, the company's revenues totaled $25.1 bn showing an
increase of 11% y-o-y from $22.65 bn and 2.24% increase on a q-o-q basis from
$24.55 bn. Net profit stood at $1.5 bn, an increase 22.95% from $1.22 bn in the
same period last year. During the quarter, on a y-o-y basis, revenue in the
Americas grew 6% to $10.4 bn, revenue in Europe, the Middle East and Africa grew
14% to $10.7 bn, and revenue in Apac grew 15% to $4.0 bn. Personal Systems Group
revenue grew 17% y-o-y to $8.7 bn, with unit shipments up 19% on a y-o-y basis.
Notebook revenue grew 40% over the prior year period, while desktop revenue
declined 1%. Commercial client revenue grew 8% y-o-y, while consumer client
revenue increased 28%. Imaging and Printing Group revenue grew 7% y-o-y to $7 bn.
On a y-o-y basis, supplies revenue grew 11% and commercial hardware revenue grew
2%. Enterprise Storage and Servers reported revenue of $4.5 bn, up 5% over the
prior year period. HP Services revenue increased 5% y-o-y to $3.9 bn. Revenue in
Technology Services grew 1% over the prior year period, while consulting and
Integration revenue up 10% and Outsourcing Services revenue up 11%. HP Software
revenue was $550 mn, an increase of 81% y-o-y, reflecting strong momentum in the
Mercury business. HP Financial Services reported revenue of $547 mn, an increase
of 10% y-o-y. HP estimates that Q2, 2007 revenue will be approximately $24.5 bn
and full year 2007 revenue will be approximately $98-99 bn.

HP shares are currently traded at $39.61.