STMicro sees chip revival
French chipmaker expects fourth- quarter rebound in semiconductors
September 7, 2001: 5:22 a.m. ET
LONDON (CNN) - STMicroelectronics, Europe's biggest chipmaker, expects the battered semiconductor market to recover in the fourth quarter.
"The crisis involving semiconductors, and therefore us as well, will reach its climax in the third quarter but there will be a recovery in the fourth," CEO Pasquale Pistorio told reporters on Friday.
His comments, along with Intel's prediction on Thursday that third-quarter revenue and gross margins are likely to come in within the range excutives provided in July, gave battered technology stocks a much needed fillip.
Investment bank Goldman Sachs added to an optimistic mood, saying it had restarted coverage of the European semiconductor sector with an "overweight" rating. Analysts at the bank said European semiconductor stocks were cheaper than shares of rivals in other regions and had been oversold.
"We believe investors have overreacted and oversold the shares," Goldman Sachs said in a note to investors. "Investors should begin to accumulate Euro semi shares in advance of a fundamental recovery that, while it may prove muted, appears to be more probable than further deterioration."
"Fundamentals are still bad, but future comparisons are likely to make the recovery look better than the absolute numbers would normally imply," it said.
Shares in STMicroelectronics (PSTM) rose 4.1 percent to 29.45. The stock had tumbled 12 percent on Thursday as European bourses slid to their lowest levels this century. STMicro has fallen 39 percent this year and is down more than 74 percent from it May 2000 peak of 74.33.
Goldman Sachs analyst Gunnar T. Miller said it added Infineon Technologies (FIFX), Europe's second-largest chipmaker, and Philips Electronics, the regions No. 3, to its "recommended list." Infineon's stock rose 3.9 percent to 22.68 and Philips nosed up 0.5 percent to 26.32.
ARM Holdings (ARM), Europe's biggest chip designer, rose 3.6 percent to 257.6 pence, and Dutch chip equipment supplier ASML edged up 0.6 percent. Both companies, along with STMicro, were given a ""market outperform" rating by Goldman. |
