Good News from Philips
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Philips leads European chip stocks
Outlook cheers sector, Intel ahead
By Emily Church, CBS.MarketWatch.com
Last Update: 9:09 AM ET April 16, 2002
LONDON (CBS.MW) - European semiconductor stocks rose sharply Tuesday after Dutch electronics maker Philips posted profits in its March quarter, ahead of expectations and indicated that the trough in its businesses looks to have passed.
Philips reached profits after a recovery in its chip and electronics components businesses. Sales decreased 7 percent from the year-ago period to euro 7.6 billion ($6.7 billion), but were also better than expected. Sales were higher in its domestic appliances and medical systems divisions.
Philips didn't alter its outlook for earnings and sales for the year, saying it was waiting for better indication that end-market demand was driving the order growth it's seeing.
Yet the outlook was still better than many were expecting, analysts said.
Chip sector "valuations were starting to be demanding and were pricing in a strong recovery from end customers, but it's clear from what Philips said gives a good indication that demand will be there for the second quarter," said Bruno Allain-Hemeray, hardware and equipment analyst at Oddo Pinatton in Paris.
"A very big risk factor for the semiconductor and the stock market on the whole seems to be reduced," he said.
Philips posted earnings of euro 9 million before special items, well down from euro 93 million a year ago, but ahead of some estimates for losses over euro 100 million. It posted a euro 182 million loss a year ago. See full story on Philips results
"There is some improvement in demand coming through and that's what Texas Instruments was talking about last night and adds to customer destocking, but we haven't yet seen fundamental improvement in demand," said Peter Knox, technology industries analyst at Commerzbank in London.
TI (TXN: news, chart, profile) late Monday posted a loss in its March quarter but said sales were increasing as customers restocked. Analysts over night said TI guided for 10 percent sales growth in the second quarter.
Shares of Philips (PHG: news, chart, profile) rose 6.5 percent in Amersterdam, leading volumes. STMicroelectronics (STM: news, chart, profile), a Franco-Italian company and the largest chipmaker in Europe, was up 5.5 percent and ASML (ASML: news, chart, profile), a Dutch chip equipment maker, rose 5.9 percent.
Germany's Infineon chipmaker (IFX: news, chart, profile) was up 4.4 percent.
Emily Church is London bureau chief of CBS.MarketWatch.com. |
