Dredging the Bottom in Comms
By Gale Morrison, Electronic News -- 6/27/2002 3:12:00 PM
Electronic News
Just as communications IC companies were closing up the second-quarter books last week and perhaps mildly hoping for a seasonal uptick in demand to surface, the news of WorldCom’s likely bankruptcy hit the Street and a new wave of dread hit the economy.
On Wednesday, Hans Mosesmann and his team at Prudential Securities Inc. downgraded the programmable logic stocks it covers – Xilinx, Altera and Lattice – from buy to hold because of their exposure to the communications segment. Mosesmann, managing director of semiconductor research at Prudential, said he initiated coverage of comms pure-plays PMC-Sierra, Vitesse Semiconductor and Exar last month with a hold.
He said the picture is not entirely negative but rather mixed.
“The second quarter for communications IC companies – it’s going to be tough,” Mosesmann said. “But it also depends on what side you are playing in. If you are in telecom infrastructure, it’s very, very tough. For wireless, it’s mixed. In datacomm, it tends to be a little better.
“Net, net – it’s mixed. The preannouncements of Alcatel and the pushouts we’re seeing on the carrier side of things and their spending forecasts and what not … It looks like the comms IC space, particularly on the telecom side, is going to come out of this recovery much more slowly than we had hoped,” he said.
The Prudential team believes IC companies looking for bright signs on the infrastructure side won’t find much for the rest of the year.
For more on this story, please see this Monday's (7/1) edition of Electronic News.
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