Vishay Intertech Off 8%; CFO Says Can't Explain
Dow Jones Newswires
July 27, 2000
By Frank Byrt
BOSTON -- Shares of Vishay Intertechnology Inc. (VSH) fell as much as 10% despite the release of record earnings for the second quarter and a healthy outlook.
The market response left company executives puzzled, though an analyst noted that a general decline in the Nasdaq market Thursday may have contributed to the decline.
"We don't understand it," Chief Financial Officer Richard Grubb said of the stock's decline. "We are confused, when after putting out a report like this, and the most positive outlook we've ever had about our future."
Theodore Kundzt, an analyst for Needham & Co., agreed that the share price decline is perplexing, "but it looks like some people must being making a macro-call that growth will be slowing," next year.
Kundzt said cell phone sales are seen as a big driver of orders for Vishay's components, so some investors may be taking a cue from Nokia Corp.'s (NOK) comments Thursday that its sales growth may be slowing as an early indicator that sales for component makers will be weak.
"So it's the whole sector," being affected by the turn in sentiment, he said, an outlook he doe not agree with. "Some people must see a slowing, but so far there does not appear to be signs of one," Kundtz said.
Vishay, a Malvern, Pa., manufacturer of passive electronic components Thursday morning reported earnings of 96 cents a share on revenue of $612.8 million compared with 16 cents on revenue of $425.3 million a year ago.
It also reported bookings in the second quarter were $858 million, the highest quarter of bookings in the history of the company. Backlog at the end of the quarter was $943 million, also a record.
"There's no rational explanation," for the stock performance, agreed Alexander Alma, a research analyst for Robb Peck McCooey. "This is crazy."
But Alma notes that shares of Vishay's closest competitors, are also off by similar percentages.
AVX Corp. (AVX) was down 8.1%, while Kemet Corp. (KEM) was off 9.4%..
And Fairchild Semiconductor International Inc. (FCS), which also reported record earnings this week, is off 9.8%.
Kundzt remains confident in Vishay, and is maintaining his "strong buy" rating and is raising his revenue and earnings estimates later today. Kundtz said 2001 earnings per share could be as high as $4.20.
His firm has a price target of $57 within the next 12 months.
Alma described the conference call as very upbeat, adding that the company reported "good visibility to mid-2001," which means it expects solid order growth for the next 12 months.
"They said the demand is high for all sectors" of products that the company makes, he said. "I'm not going to change my numbers," for projected revenue and earnings, adding that he is reiterating his "buy" rating on it.
In recent trading, shares were down 2 3/8, or 7%, at 31 5/8 on composite volume of 3.6 million compared with average daily volume of 3 million. Shares traded as low as 29 5/8 earlier.
- Frank Byrt, Dow Jones Newswires; 617-654-6742
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Great quarter and investors buy insurance stocks today.
Jack |
