STM is flying too. The "other" MPEG-2 company.........
ST Shares Rise on Two-Year Industry Growth Forecast
Paris, Nov. 2 (Bloomberg) -- STMicroelectronics NV shares rose 11 percent after Europe's second-biggest chipmaker told analysts last week it sees uninterrupted industry growth for the next two years.
The shares closed up 9.2 euros at 92.7 euros ($97.33). The shares were the leading gainer on the Paris benchmark CAC 40 Index. In New York ST shares rose as much as 8 3/4, or 9.74 percent, to 98 9/16.
ST's shares have surged 160 percent since January on optimism that global chip sales will rise 15 percent this year, the first time industry growth will exceed 10 percent since 1995, according to revised figures from the Semiconductor Industry Association. ST told analysts in New York last Friday it also expects growth next year to surpass earlier forecasts.
''They're saying the upturn will last,'' said Karsten Iltgen, an analyst with WestLB Panmure in Dusseldorf, Germany, who rates the shares ''buy,'' with a price target of 95 euros. ''They also don't see any significant add-ons in industry capacity, which should help prices.''
Chip prices should remain firm or rise, especially for ''flash memory'' designs that retain stored data even when power is shut off on devices such as mobile phones, ST's chief economist Jean-Philippe Dauvin told analysts.
The company also said it's creating new applications for a design that combines the functions of several chips on one, a ''system-on-a-chip'' strategy, Iltgen said.
''They seem to be at the forefront in this development,'' he said. The new applications will ''complement another chip design used for set-top boxes called Omega. They want to develop other applications such as mobile phones.''
ST also revised its forecast for industry growth in 2000, saying it now expects growth to reach 25 percent, up from 22 percent, French bank BNP said, citing Dauvin. BNP rates ST's shares ''outperform.''
New Chips
Analysts also pointed to news that ST and Telia AB, the Swedish state phone company, said they developed gear designed to allow faster access to videos and the Internet.
Called Zipper-VDSL, for very high bit-rate digital subscriber line, the prototype permits users to access so-called ''video-on-demand'' and the Internet over regular phone lines at speeds as much as 1,000 times faster than conventional analog modems, the companies said.
ST and Telia said last year they were working to develop a world VDSL standard.
Last month, ST said third-quarter profit rose 33 percent to $135.3 million, boosted by demand for more powerful chips from makers of mobile phones, car stereos and palmtop computers.
Worldwide semiconductor sales rose to $12.7 billion in September, up 6.4 percent from August and 24 percent against the year-ago period, the Semiconductor Industry Association said in a report today. The month's sales were the largest recorded so far this year.
Global sales are expected to be in excess of $144 billion in 1999, the organization noted, adding it sees sales increasing 21 percent next year, 20 percent in 2001 and 12 percent to $234 billion in 2002.
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RESEARCH ALERT-Goldman ups STMicro target to $125
LONDON, Nov 2 (Reuters) - Goldman Sachs said on Tuesday it raised its share price target on French electronics group STMicroelectronics <STM.PA> <STM.N> to $125 from $85 and repeated a "market outperformer" rating on the stock.
In a research note, Goldman analysts said they saw STM as a key beneficiary of growth in wireless and digital consumer products, while in the short term they had changed their view that there would be a slowdown in first quarter demand.
"The capacity shortages are so intense that STM will probably not have the usual seasonal effect," the note said.
((David Holmes London Newsroom +44 171 542 4367 fax +44 171 542 2120, uk.equities.news@reuters.com))
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STMicroelectronics Shares Rise on Improving Industry Outlook
Paris, Nov. 2 (Bloomberg) -- STMicroelectronics NV shares rose as much as 10 percent after Europe's second-biggest chipmaker said last week it sees years of industry growth.
The shares rose as much as 8.3 euros to 91.8 euros ($96.73) in Paris. The shares were the leading gainer on the benchmark CAC 40 Index.
The chip industry will experience a sustained period of growth, ST's chief economist Jean-Philippe Dauvin told analysts Friday in New York. Chip prices should remain firm or rise, especially for ''flash memory'' designs that retain stored data even when power is shut off on devices such as mobile phones.
''They're saying the upturn will last at least two years,'' said Karsten Iltgen, an analyst with WestLB Panmure in Dusseldorf, Germany, who rates the shares ''buy,'' with a price target of 95 euros. ''They also don't see any significant add-ons in industry capacity, which should help prices.''
The company is also developing new applications for a design that combines the functions of several chips on one, a ''system- on-a-chip'' strategy, Iltgen said.
''They seem to be at the forefront in this development,'' he said. The new applications will ''complement another chip design used for set-top boxes called Omega. They want to develop other applications such as mobile phones.''
ST also said the industry would grow next year by 25 percent, up from an earlier forecast of 22 percent, French bank BNP said, citing Dauvin. BNP rates ST's shares ''outperform.''
Analysts also pointed to a report saying that ST and Telia AB, the Swedish state phone company, announced the development of a new generation of silicon chips.
The chips are designed for full motion video capability over regular phone lines at speeds up to 1,000 times faster than conventional modems, the Financial Times reported, citing ST vice president of advanced system technology, Andrea Cuomo.
ST and Telia are now working to have the new technology, called ''Zipper VDSL,'' adopted as the world standard, thus superseding ADSL, currently the favoured high-speed Internet access technology, the Financial Times reported.
Last month, ST said third-quarter profit rose 33 percent to $135.3 million, boosted by demand for more powerful chips from makers of mobile phones, car stereos and palmtop computers.
Nov/02/1999 5:25
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