intel

TEXAS INSTRUMENTS INC. $32 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.4 billion; Market cap: $44.8 billion; WSSF Rating: Average) is more versatile than Intel or Nvidia. That’s because it makes chips for a wider variety of electronic devices, including mobile phones, digital cameras and DVD players. It has over 50,000 customers, although mobile phone maker Nokia Corp. accounts for about 15% of its total revenue. Strong competition in the chip industry continues to drive down prices. To help keep its profit margins high, Texas Instruments is now working on ways to cut its manufacturing costs. For example, it now outsources about half of its advanced digital chip manufacturing to outside firms. Texas Instruments feels these moves, plus closing older plants, will save it $200 million a year. Texas Instruments earned $0.52 a share (total $758 million) in the third quarter of 2007, up 15.6% from $0.45 a share ($686 million) a year earlier....

NVIDIA CORP. $38 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 548.8 million; Market cap; $20.9 billion; WSSF Rating: Average) is the most specialized of these three chipmakers. It develops 3D graphics chips and related technology for computers, gaming consoles and other electronic devices. The company focuses on design, and outsources production to other chipmakers. Nvidia’s stock has nearly doubled in the past six months, despite concerns over the recent acquisition of chief rival ATI Technologies by Advanced Micro Devices (AMD). Although AMD-powered computers will probably only use ATI graphic chips in the future, Nvidia is doing a good job expanding into new fields such as graphics chips for cellphones and handheld video game players. Nvidia now has roughly 33% of the graphics market, up from 20% a year earlier....

INTEL CORP. $26 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.8 billion; Market cap: $150.8 billion; WSSF Rating: Above average) is the world’s largest maker of electronic chips. Microprocessors for personal computers and servers account for two-thirds of its revenues. Intel ran into trouble a few years ago as new chips from its main competitor, Advanced Micro Devices Inc. (AMD), cut into its market share. But Intel has done a good job cutting costs, which will help it survive future price wars with AMD. The company has also shifted its research focus, from raw chip speed to chips that use less energy and run cooler. In the high-margin server market, AMD recently started selling its new “Barcelona” chip, which has four processors (quad-core) compared with just two on competing Intel chips. Multi-core chips let computers perform several tasks simultaneously....

Computer chip making is a highly competitive business, and requires heavy spending on research and new product development. That’s why we focus on industry leaders that can easily absorb these huge costs, like Intel, Nvidia and Texas Instruments. Although earnings at all three are rising strongly, we see only two as buys at current prices. INTEL CORP. $26 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.8 billion; Market cap: $150.8 billion; WSSF Rating: Above average) is the world’s largest maker of electronic chips. Microprocessors for personal computers and servers account for two-thirds of its revenues....

XEROX CORP. $17 (New York symbol XRX) has agreed to acquire Advectis Inc. for $32 million. Advectis makes software that helps mortgage lenders electronically store and share documents. The price is just 12% of the $266 million or $0.28 a share that Xerox earned in the second quarter of 2007. But the deal gives Xerox an opportunity to market its printers and copiers to Advectis’s growing client base. Buy. GANNETT CO. INC. $45 (New York symbol GCI) has completed a two-year plan to shrink the width of its 85 daily newspapers to cut paper costs. Further size reductions are possible, but the costs to redesign layouts could outweigh any extra savings. Meanwhile, Gannett has increased its dividend 29% to $1.60 a share (3.6% yield). Best Buy. INTEL CORP. $26 (NASDAQ symbol INTC) plans to launch its new chips for corporate server networks in November. These chips are 60% smaller than current chips, but 20% more powerful. The new chips should help Intel recapture some of the market share it lost to rival Advanced Micro Devices over the past few years. Buy.

APPLE INC. $131.77, Nasdaq symbol AAPL, aims to solidify its 70% share of the digital music player market with its new line of iPods, including a version that can wirelessly connect to the Internet. A new alliance with the Starbucks coffee chain will also make it easier for iPod users to wirelessly download music from Apple’s iTunes music store. However, the stock fell 10% on news Apple is cutting the price of its iPhone by a third. The company will soothe the feelings of customers who bought an iPhone prior to the price cut by giving them a $100 credit toward future purchases. Investors took the price cut as a sign that iPhone demand is already weakening, just two months after its heavily hyped launch. But Apple may hope to make up the lost revenue in bigger iPhone sales volumes, particularly in the Christmas selling season, and possibly from the benefit of introducing Apple products to a larger segment of the public....

NASDAQ-100 TRUST SHARES $49.18 (Nasdaq Exchange symbol QQQQ; buy or sell through brokers) or ‘Qubes’, hold the stocks that represent the Nasdaq-100 Index. This index is made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. Expenses are about 0.20% of assets. The top 10 highest-weighted stocks are Apple Computer, Microsoft, Qualcomm, Google, Cisco, Intel, Research in Motion, Comcast, Oracle and e-Bay. Nasdaq-100 Trust Shares are a buy for aggressive investors only.

The best exchange-traded funds (ETFs) offer well-diversified, tax-efficient portfolios with very low management fees. Due to buyback and share issue arrangements, ETFs always trade close to their net asset value. Here are some of the best deals available in ETFs. We’ve also analysed one we don’t like. ISHARES CDN LARGECAP 60 INDEX FUND $79.86 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSX. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSX. Expenses on the units are just 0.17% of assets....

MOODY’S INC. $46.45, New York symbol MCO, has dropped by a third since the start of June due to the turmoil in the mortgage market. Moody’s charges bond issuers a fee for a credit rating, and the recent problems could hurt investor interest in new debt securities. The company could also face class-action lawsuits from subprime mortgage investors who relied on Moody’s ratings. Politicians will probably call for new controls on rating agencies, which could hurt Moody’s prospects. Our view is Moody’s will overcome these setbacks. But the stock could fall further in the next few weeks....

DOW JONES & CO. INC. $55.00, New York symbol DJ, moved a step closer to selling itself to News Corp. after its directors advised stockholders to accept News Corp.’s $60-a-share cash offer. However, the deal requires the approval of the Bancroft family, which controls 64% of Dow Jones’ voting power through class B shares that carry 10 votes each. The family will probably make a final decision next week. So far, no other bidder for Dow Jones has emerged. If the family turns down the News Corp. offer, the stock will probably drop back to its pre-bid level of about $35. That would increase the likelihood of a class-action lawsuit, but that would probably be more an annoyance than an economic threat. The family isn’t obliged to sell simply because an offer came in above the market. We feel investors should hold....