I do not see the same analyst reaction as you. Seems to me that many are hopping on the "sky is falling" bandwagon (or at least indicating signs of caution -- see excerpt below for an example). IMO some of these reiterations and targets are lukewarm but were made necessary by the excellent report from AMAT.
Whether or not doom is on the horizon is still a matter of opinion. Contributors on this thread have helped me to analyze the situation with their insight, reporting and knowledge of the industry -- enabling me to form my own conclusion f(which I have yet to do).
That seems to make it a pretty valuable thread. I am surprised you disagree.
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bloomberg.com
s=AOZL4PRYrTmFzZGFx
Stock Market Update
Thu, 10 Aug 2000, 4:07pm EDT
Nasdaq Falls as Investors Unload Technology Shares; Gap Drops, Lilly Rises
By Robert Dieterich
New York, Aug. 10 (Bloomberg) -- The Nasdaq Composite Index declined, led by Cisco Systems Inc., as investors sold technology stocks in favor of drug, beverage and industrial shares.
Applied Materials Inc. dropped, dragging down semiconductor-related stocks including Micron Technology Inc. and KLA-Tencor Corp. While the chip-equipment maker's third-quarter profit topped expectations, its report fueled investor concern earnings may be slowing for chip companies.
``It's time to lower expectations and invest in those companies that have a chance of meeting or beating earnings expectations,'' said Alan Skrainka, chief market strategist with Edward D. Jones & Co. in St. Louis. He said investors are buying Coca-Cola Co., Johnson & Johnson and General Electric Co. shares because their profits will grow even in a slowing economy.
<snip>
Chip Slide
Applied Materials fell 3/8 to 71 3/4. The company said profit more than doubled to 70 cents a share in its fiscal third quarter. Its report came as semiconductor stocks have slid 24 percent in the past month on concern the tight supply of chips is loosening.
``The highest growth rate portion of the (semiconductor) cycle is clearly behind us,'' said UBS Warburg analyst Byron Walker, who repeated his ``buy'' rating on Applied Materials while saying the stock will rise to 90 over the next year, not 115, his previous target.
The Philadelphia Stock Exchange Semiconductor Index dropped 1.9 percent, with Micron Technology falling 5 7/16 to 76 5/16 and KLA-Tencor sinking 3 5/8 to 42 5/8.
The renewed concern about slowing earnings growth comes after stocks rose on optimism the Federal Reserve might be finished raising interest rates this year after six increases since June 1999, which have kept inflation in check and limited economic expansion.
`Faustian Bargain'
``You can't have rates peak without a slowing economy and slowing profits,'' said Larry Wachtel, market analyst at Prudential Securities Inc. ``That's the Faustian bargain.''
Wachtel said that Applied Materials' profit report ``was good but not great.'' Given their high price-to-earnings ratios, semiconductor and other technology stocks need to ``blow the doors off'' with their quarterly profit reports. ``These stocks are at levels that demand stronger wine.''
Microchip Technology Inc. rose 3 7/16 to 73 1/2. The computer chipmaker said it expects second-quarter sales and profit to beat market estimates and its earlier forecasts. Microchip Technology's semiconductors are used in cars and computers, among other products. |
