Q1:FY09 guidance was slightly below consensus and our previous estimate. FY09 guidance was in-line with consensus and above our estimates on the top-line but the mid-point was well below consensus on the bottomline. Approximately $0.03-$0.04 of this was due to lower interest income assumptions.

A few factors that may continue to be impediments to this growth trend may include increased competition from larger ERP vendors, unforeseen merger integration issues with Intentia and technological disruptions. Additionally, we expect to see consulting growth decrease to the low single-digits as Lawson outsources more of the low margin work to integration partners.

In the near-term, risks remain the following: the departure of the VP of services, the Manila ramp and shift to greater partner reliance. In the long-term, however, we believe Lawson is on track. Lawson's shares currently trade at 16.1 times our FY2008 EPS estimate. Based on guidance, we have adjusted our revenue and EPS estimates for Q1 and FY2009. Consequently, we are maintaining our target price of $10.00, which is 22.2 times our FY2009 EPS estimate.

Intersil Semi Margins Pressured

Intersil Corp. (ISIL) is an original equipment manufacturer (OEM) of analog and mixed-signal semiconductor ICs. March quarter revenue was in line with consensus estimates although the EPS exceeded. Forward guidance is for a 5-8% revenue increase in the next quarter. An unfavorable mix, low utilization rates and rising gold prices combined to bring down the gross margin.

The management mentioned several margin improvement initiatives, benefits from which should come in gradually over the next 12-18 months. We are reiterating our Hold rating on ISIL shares.

The computing segment continues its growth trajectory and lead times remain significantly higher than the corporate average. All except the consumer segment declined in the last quarter. Intersil has $2.50 in net cash per share and has been paying a dividend for the last two years.

Revenue from the company's new high-frequency synchronous buck regulator and digital output sensor is expected to ramp in the second half of 2008. In the last quarter, the company secured its first design win in the SERDES family, revenue from which will be more of a 2009 phenomenon.

The company has a very broad-served market in the industrial space, and continues to expand its offerings in several high-growth application areas. Demand for next-generation UPS is expected to remain strong. Design win activity remains strong, and many of the products continue to do very well. We remain optimistic about the company's position in the industrial market. Investment in R&D is a focus area.

Since computing is typically a lower gross-margin business, the expected increase in computing sales through 2008 could have a slight negative impact on margins. The consumer business will also face hurdles. We are concerned about the softness in the industrial market.