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JPMorgan Chase & Co, U.S. Bancorp, BB&T Corporation, Xilinx and Altera

  //business-finance.news-articles.net/content/201 .. -bancorp-bb-t-corporation-xilinx-and-altera.html
  Published in Business and Finance on Monday, December 20th 2010 at 7:11 GMT by Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: JPMorgan Chase & Co.(NYSE: [ JPM ]), U.S. Bancorp(NYSE: [ USB ]), BB&T Corporation(NYSE: [ BBT ]), Xilinx Inc.(Nasdaq: [ XLNX ]) and Altera Corporation(Nasdaq: ALTR).

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Here are highlights from Fridaya™s Analyst Blog:

Tax Bill Passes: An Economic Boon?

According toCenter for American Progress, the deal is expected to create about 3.1 million new jobs in total after adding up different provisions. The estimate is based on the Congressional Budget Office's estimate of one million new jobs for each 1% of GDP growth.

However, based on the same assumption, the Obama administration had previously claimed that the $787 billion under the American Recovery and Reinvestment Act (ARRA) would create 3.5 million jobs. But this did not occur; the unemployment rate stands at 9.8%. And the government had not created jobs in the private sector directly by implementing rules or laws.

Though the government stimulus packages are able to increase GDP, most of the private sector firms are on the verge of recovering their financial conditions with cost savings by limiting recruitments. We dona™t think the new tax-cut deal will be able to address the unemployment problem to a great extent as many of the companies are still struggling with weak financials.

The recession continues to take its toll on banks. There have been 151 bank failures so far this year. With loan losses on commercial real estate on the rise, hundreds of more banks are likely to crash in the next few years.

The bank failures have resulted in a wave of consolidation in the industry. When Washington Mutual was in the red in 2008 it was deemed as the largest bank failure in the U.S. history, and was acquired byJPMorgan Chase & Co.(NYSE: [ JPM ]). The other major acquirers of failed institutions since 2008 includeU.S. Bancorp(NYSE: [ USB ]) andBB&T Corporation(NYSE: [ BBT ]).

If the current pace of consolidation continues, we will see the emergence of a handful of large banks. As a result, the overall economy will not remain unscathed and job creation will again become difficult.

Xilinx Downgraded to Neutral

We recently downgraded our recommendation onXilinx Inc.(Nasdaq: [ XLNX ]) to Neutral from Outperform.

We believe Xilinx lost market share toAltera Corporation(Nasdaq: [ ALTR ]) in 2010. Alteraa™s lead at the 40 nm technology node can bring about a market loss for Xilinx in the coming years as well.

Capital spending by carriers in China is also expected to slow down in 2011, leading to an inventory correction across the semiconductor space, which should impact Xilinx as communications is the largest end-market thecompany serves.

Earlier, Xilinx reported lackluster results for the second quarter and provided a disappointing guidance for the third quarter. The outlook for the next quarter was below expectations. Xilinx projects sales to be flat to down 4% sequentially in the third quarter of 2011.

This implies a revenue guidance of $594.9 a" $619.7 million. Sales from communications are expected to be approximately flat as increases in wired communication are offset by decreases from wireless communications.

Industrial and other sales are expected to be approximately flat as increases in defense sales are offset by decreases in industrial scientific and medical as well as test and measurement. Consumer and automotive sales are expected to be up, driven by increases in automotive and audio video broadcast. Data processing sales are expected to decrease.

Xilinx forecasts a gross margin of 65%, +/- a percentage point. Operating expenses in the December quarter are estimated to be approximately $190 million, an increase of 3.4% sequentially primarily due to a restructuring charge of $4 million.

While XLNX had the lead at 65nm (Virtex 5), prime competitor Altera has the lead at 40nm. Altera started shipping its 40nm products in late 2008 while Xilinx began shipping its next generation Virtex 6 (40nm) products in 2009 only. Xilinx has lost market share to Altera in 2010.

In addition, Altera seemed to have an edge at the 28nm node. It shipped its first samples in July 2010 while Xilinx will ship its samples in the first quarter of 2011.

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