This is a week old, but don't think it's been posted. Another CUBE mention by Scovel (Fahnestock analyst)...
techweb.com
October 04, 1999, Issue: 1180
Section: Business & Finance
Electronic stocks hit the skids amid broad correction
Bolaji Ojo
September is proving to be the month that many Wall Streeters thought would never arrive. A correction momentum is building in the stock market, according to analysts, and electronics stocks are feeling the heat as anxious investors look for safer grounds to park their money.
Electronics issues hit the skids again last week, puncturing one of the longest rallies in the history of the market. The EBN/Thomas Weisel Supply-Chain Index fell 3.66% in the week ended Sept. 29, to 1560.28, its lowest level since Aug. 4.
The index has dropped more than 6% since hitting an all-time closing high of 1667.5 on Sept. 8. During the same period, the Dow Jones Industrial Average fell 8.7% and is down about 10% from its all-time high.
"By definition, a 10% decline in stocks is proof we've entered correction territory," said Dan Scovel, an analyst at Fahnestock & Co. Inc., New York. "The health of the economy has been reflected in the high valuation of stocks, but if you've been selective, you've hopefully made money."
For investors in electronics stocks, the strong recovery has been muddied by developments overseas, particularly the tragic earthquake in Taiwan, which analysts said could negatively impact semiconductor companies, particularly the fabless outfits that depend on the island's major foundries.
To get around this problem, analysts said investors must become more selective and seek out small-cap companies that were largely ignored during the one-year run-up in the bull market.
"We've seen some rockiness in the market because future growth expectations for the big-cap companies have played a role in their valuation," Scovel said. "It's time to look closely at small electronics stocks like S3, Silicon Storage Technology, Cypress, and C-Cube Micro Systems."
OEMs, especially companies that continue to pay dividends, are also expected to receive some attention in the current market. While all other segments of the EBN index lost ground in the last week, the OEM Products & Subsystems index rose 2.94%, to its highest level. The leaders in that segment were Key Tronic Corp., which added 18.18%, and C&D Technologies Inc., which rose almost 12%, to $35.69.
C&D, Blue Bell, Pa., a manufacturer of electrical power-storage and -conversion products used in telecommunications, computers, and office equipment, rose sharply after announcing that its would pay its regular quarterly dividend.
Meanwhile, Praegitzer Industries Inc.'s stock fell 16.97% after the company said it was exploring options that could include putting the company up for sale.
Copyright ® 1999 CMP Media Inc. |
