SSB remains positive on wireline communications IC...
Semiconductor 4Q Preview:
January 8, 2001
Jonathan Joseph
Clark Westmont
Dunham Winoto
An excerpt from the report:
COMM ICS OVERVIEW
We remain relatively more constructive about the prospects for the communications IC pure-plays vis-a-vis the overall semiconductor cycle. While tougher industry conditions will likely reduce the upside potency of many suppliers compared to previous quarters, the sales growth in December should still be one of the brightest spots in an otherwise dreary technology tape. This distinction is made possible by the group's relatively high backlog coverage, limited use of stocking distributors, strong product cycles, and the overall megatrend toward greater use of 'application specific standard products'. During the quarterly conference call season the primary investor focus will be upon the companies' outlook for March. In general, we expect most companies in the group will maintain double-digit sequential sales growth guidance for the March quarter. Given the overall bearish sentiment and wall of worry in the stock market, this outlook should be a cause for relief for most shareholders. Of equal importance, however, will be any data points that can be gathered about the state of end-market demand for communications equipment. As such, component companies and their investors will closely watch quarterly reports from bellwethers such as Nortel Networks, JDS-Uniphase, and Juniper Networks. In addition, macroeconomic factors such as Fed Fund rates will carry heightened relevance, particularly as they impact the capital spending plans of major telecommunications carriers and corporate IT managers. These larger factors are likely to impact the near-term communications IC stock action as much as the company-specific earnings reports. |
