09:08 ET Anadigics (ANAD) 29 7/8: -- Update -- More on the fall-out: ERICY is ANAD's largest customer and MOT was second according to the firm's latest 10K; other cell players are NOK and QCOM. Other semi companies with exposure to these firms include RFMD, TQNT, AHAA, ADI, and TXN. CIBC Worlds Mkts has already downgraded ANAD to HOLD from STRONG BUY.
09:07 ET ANAD Fallout : Stocks to focus on this morning in light of cellular production cuts are Alpha Industries (AHAA) and TriQuint Semiconductor (TQNT), as both companies have meaningful exposure to Ericsson (ERICY).
08:54 ET Anadigics (ANAD) 29 7/8: -- Update -- Prudential assuming coverage of stock with a STRONG BUY rating. Firm has a price target of $50 per share. This call preceded ANAD's warning this morning.
08:30 ET Anadigics (ANAD) 29 7/8: -- Update -- Says its largest wireless customer has recently formally notified its suppliers that difficulties with component supply due to a fire at a supplier's factory earlier this year has caused it to reduce production. According to latest 10K filing, Ericsson (ERICY) accounted for 53% of revenues. Other stocks that could be impacted by this news are CY, TXN, TQNT, RFMD, AHAA, MOT.... ANAD has fallen to $22 in pre-market.
08:26 ET Anadigics (ANAD) 29 7/8: Warns of a sequential revenue shortfall of 30%-35% from Q3 revenue target, which company expects to result in a substantial reduction in Q4 earnings
ANADIGICS (ANAD) 29 7/8: Further bad news for the chip sector comes from ANADIGICS this morning, as the communications IC manufacturer has informed the Street that it anticipates a sequential revenue shortfall of 30-35% from a Q3 (Sep) revenue target of approximately $51 mln, which will result in a substantial reduction in Q4 (Dec) earnings from Q3. The company cites a formal notification from its largest customer (Ericsson: ERICY) that component supply shortages due to a fire earlier this year at a supplier's factory (Phillips Electronics: PHG) has caused ERICY to rebalance inventories and cancel some purchase orders. We've already written about ERICY's problems with components and their heavy reliance on Phillips (what ever happened to multiple sourcing?), so we'll leave that alone today, but we are somewhat surprised the spillover is still affecting the sector, and we're more surprised by the extent of the damage. Are we to believe that a fire at Phillips' New Mexico factory is going to drag down the whole wireless industry's fiscal second half? Ericsson accounted for 47% of ANAD's 1999 revenues, but was in the process of ramping RF switch production for Motorola (MOT). Of course, MOT has had their own problems, Motorola also recently blamed component shortages for weak operating results. ANAD went on to attempt to reassure investors that the outlook for 2001 is strong and it expects to post y/y growth in excess of 50%. However the damage has been done, and we expect to see some downgrades today, and furthermore, expect the entire sector to be on the defensive. In addition to Ericsson, the following stocks could be hit the hardest: Triquint Semiconductor (TQNT) which relies on ERICY for 10-20% of revenues and Alpha Industries (AHAA) which derives about 10% of sales from ERICY. To a lesser extent, watch for these tickers to be under pressure today: AVX, CLTK, CNXT, MOT, RFMD, SNDK, TXN. - Matt Gould, Briefing.com |
