Broadband is expected to continue its strength into the September quarter and help partially offset the weakness in the wireless business. The management indicated that the wireless business is expected to be down around 10% from the June quarter.
ANAD is increasing its investment in their 6' gallium arsenide facility in China to $100 million, up from the previously planned $49.9 million. This is expected to help complete construction of the fab by October 2008 and result in full production capabilities by the second half of 2009. The increased investment keeps the timetable of the China facility the same; it just takes the line from a pilot line to a fully operational line by the second half of 2009.
The stock is currently trading at 10.2x our current FY2008 EPS estimate of $0.58. Given the current weakness in its wireless segment, coupled with an uncertain macro environment, we have adjusted our FY2008 estimates and maintain our Hold rating with a revised target price of $8.00. Our current six-month target price is 13.8x our FY2008 EPS estimate and 11.4x our preliminary FY2009 EPS estimate.
Esterline Jets Feel Turbulence
Esterline Technologies Corp. (ESL) announced that Q3-08 EPS should be in the range of $0.55 to $0.60 because of the slippage in talks with the Canadian government regarding an R&D proposal.
However, the company also reiterated its full-year EPS guidance in the range of $3.45 to $3.55, with the likely result being more toward the high side. The Q3-08 conference call will be held on Thursday, August 28, at 5 p.m. EDT. Our estimates have been adjusted to reflect this announcement.
Esterline Corporation announced that terms-and-conditions discussions with the Canadian government regarding a research and development investment proposal, and the related claim under a government assistance program, have been deferred until after the Canadian Parliament's summer recess.
ESL's management indicated that the flurry of activity surrounding Bombardier's recent announcement regarding the launch of its new C-Series family of single-aisle jets, and its related negotiations with Canada over launch investment, influenced the timing of Esterline's discussions with Industry Canada's Industrial Technologies Office's Strategic Aerospace Defense Initiative (SADI) committee. Esterline's talks regarding the proposal to SADI are now targeted for September.
News Corp a Buy on Valuation
News Corp (NWS) has a solid global distribution platform with a clear focus on the television broadcasting and satellite sectors. The company has amassed a complementary asset mix, which underpins its ability to control both content and distribution of products.
