Tight semiconductor market can only get worse - Barron's
NEW YORK, April 15 (Reuters) - If Wall Street thought the
first quarter was a tough one for semiconductor stocks, the
second quarter will "most certainly be worse," according to
Alan Abelson, columnist for financial weekly Barron's.
Citing recent research on the semiconductor industry from
Boston investment research firm Fechtor Detwiler, Abelson
argues against the current pervasive sentiment that because
semiconductor stocks are now so low there is no place for them
to go but up.
"The notion suddenly so popular in Wall Street that the
absence of any bookings means things can only get better, for
some reason, the firm reports, has utterly failed to reassure
the sales reps and distributors who peddle the semis and have
been wrestling with a 'bigger issue than inventory overhang,'"
Abelson wrote.
"And, wouldn't you know, someone plumb forgot to inform
folks in the chip business that pricing pressure has been
eliminated," he added.
Abelson also points to the recent hop in technology stocks,
led by such top players as Micron Technology Inc. <MU.N>, may
have been slightly premature, given that other companies are
still reporting problems such as significant price pressures
and excess inventory, to name a few, and that those issues are
not likely to be resolved in the near future.
According to the Fechtor Detwiler reporter, Abelson said,
STMicroelectronics NV <STM.PA> has offered to beat any
competitor's price and guarantee a 30 percent margin to the
distributor, a move that can only hurt related companies like
ON Semiconductor Corp. <ONNN.O>, International Rectifier Corp.
<IRF.N>, Fairchild Semiconductor International Inc. <FCS.N> and
Toshiba Corp. <6502.T>
He also notes how, according to Fechtor Detwiler, equipment
makers such as Sycamore Networks Inc. <SCMR.O>, Cisco Systems
Inc. <CSCO.O>, Nortel Networks Corp. <NT.N> and Lucent
Technologies Inc. <LU.N> have "gotten the word from their
broadband-carrier customers that prices have to be shaved some
40 percent, or they needn't bother wasting their breath asking
for new orders."
"In brief, on closer inspection, that 'bottom' in
semiconductors appears to be nothing more than an optical
illusion, a dreadful side effect, no doubt, of going so long
without even a morsel of good news," Abelson wrote.
(( -- New York Wired Desk 212/859.1860))
REUTERS
*** end of story *** |
