TO ALL:Chip-equipment manufacturing shares fall
NEW YORK (DBC) -- Semiconductor manufacturing-equipment makers led chip
shares lower Friday, accounting for most of the day's downward pressure
on the technology sector, but a San Francisco analyst sees sollid buying
opportunities in the group.
The Philadelphia Semiconductor Index fell 1.2 percent, while the Nasdaq
Telecommunications Index added 0.9 percent. Strength in certain PC
makers led the Amex Computer Technology Index 0.4 percent higher. More
broadly, the Pacific Stock Exchange Technology Index declined 0.2
percent, and the tech-laden Nasdaq Composite rose 3 points to 1682.
Chip manufacturing-equipment maker Lattice Semiconductor shed 4 7/8 to
64 1/2 on UBS Securities' downgrade to to "hold" from "buy." The
brokerage cited what it sees as weakness in the programmable-logic
device industry. Applied Materials fell 2 1/4 to 94 5/8, KLA-Tencor 3 to
69 1/2, Novellus 2 to 121, Kulicke & Soffa 1 5/8 to 48, Lam Research 1
1/2 to 46 3/4, Cymer 4 1/2 to 25 1/2 and ASM Lithography 5 3/8 to 99
7/8.
Their customers fared little better. Integrated circuit manufacturer
Benchmarq Microelectronics Inc. fell 9 to 24 1/2 after warning that
third-quarter earnings would trail Street estimates of 24 cents a share
on weaker-than-expected sales of its NVSRAM and Real-Time Clock
products. Anadigics fell 1 5/8 to 47 3/8, Altera 1 1/4 to 53 3/4, Linear
Technology 1 7/8 to 71 1/8, Xilinx 1 3/8 to 50, and Micron Technology
5/8 to 34 1/2.
Soundview Financial analyst Michael O'Brien said investors aren't sure
if semiconductor manufacturing-equipment companies will continue to see
rising orders, and that their fears won't be allayed until third-quarter
numbers have come in, around the middle of October. O'Brien is
cautiously optimistic. "I'm not seeing anything on the horizon that
would suggest weakness," he said, "unless memory prices continue to
drop. Then those guys [chipmakers] may not have the money to spend. Not
that they don't want to spend, but they just may not have the cash flow
to spend."
For market players looking to buy on Friday's weakness, O'Brien suggests
Kulicke & Soffa and Novellus. He also recommends Semitool, which he
started covering with a short- and long-term "buy" rating. Semitool
shares slipped 3/8 to 24 3/8.
Among telecommunications stocks, Nokia rose 3 1/4 to 92 1/2 after the
Finnish telecom concern said it won a 1.9-billion crown order from
Connect Austria GmbH to supply the company with a complete GSM 1800
network. Octel Communications rose 1 1/8 to 30 15/16 on news that
Lucent's proposed $1.8 billion buy of the company received early
termination of the waiting period under the Hart-Scott-Rodino act.
Software developer Cognos rebounded from Thursday's sell-off, adding 2
to 24 1/16. Electronic Arts rose 2 5/8 to 37 5/8.
Creative Technology Ltd. rose 3 3/4 to 27 11/16 after Goldman Sachs
upgraded the multimedia products developer to "trading buy" from "market
outperform."
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David B. Wilkerson is an online reporter in the DBC NewsRoom.
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