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DSP Commun Up 20% After Making
Upbeat Presentation
NEW YORK -- DSP Communications Inc.'s (DSP) shares rose 20%
Friday after the company made an "upbeat" presentation at the Banc of
America Investment conference in San Francisco.
A DSP spokeswoman said the company's appearance at the conference
helped boost investor confidence about the Cupertino, Calif., company,
which has been the subject of considerable speculation in the last few
months.
In addition to rumors that DSP is a takeover target, talk has been
circulating that the company will miss analysts' third quarter earnings
estimates.
Banc of America analyst Mark McKechnie said in a research note that
DSP's vice president of business development, Anon Kohavi, was upbeat
during the presentation and noted that, while the latest quarter had been
difficult, results should be relatively in line with projections.
A First Call/Thomson Financial consensus estimate put the company's third
quarter earnings at 23 cents a share.
Adding to DSP's gains Friday is speculation that the company received
additional design contracts for its CDMA and TDMA chipsets, said
Josephthal & Co. analyst Lawrence Harris. "If this were the case, it would
certainly improve the company's outlook, particulary in the second half of
fiscal 2000," Harris said.
According to McKechnie, Kohavi indicated that the company recently
signed an agreement with a large Korean handset maker for its TDMA
chipsets, which will be announced shortly.
In addition, McKechnie said the company implied that there were three
additional wins for its CDMA chipsets. "We expect an announcement by
the Telecom 99 show in Geneva in mid-October, for shipment in the first
quarter of 2000," the analyst said.
DSP's New York Stock Exchange-listed shares closed Friday at 21 5/16,
up 2 5/16, or 12.2%, on volume of 2.6 million shares. Average daily
volume is 666,500 shares.
Other chip stocks rallied after a week of volatility. Memory-chip maker
Micron Technology Inc. (MU) again took the lead, rising 7.8% as it
prepares to report fourth quarter earnings. Analysts are projecting a loss of
18 cents a share in the period, compared with a year-ago loss of 42 cents
a share.
Scott Randall, an analyst at SoundView Financial Group, expects a loss of
17 cents a share. Further, he expects that Micron will likely paint an
optimistic portrait of the November quarter, for which he carries an
estimate of 43 cents a share. That's well above the consensus estimate of
21 cents a share, as tallied by First Call/Thomson Financial.
In a research note, Merrill Lynch reiterated its buy rating on Micron and
set a $100 price target.
The stock closed up 5, or 7.5%, to 71 1/2.
Other chip stocks rose, too, including Texas Instruments Inc. (TXN),
which closed at 86 1/8, up 3 7/8, or 4.7%. Analog Devices Inc. (ADI)
rose 2 11/16, or 5.2%, to 53 15/16. Intel Corp. (INTC), the world's
largest chip maker, rose 5/8, or 0.8%, to 74 15/16.
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