Among manufacturers of chip-making equipment, the ax fell on Rudolph Technologies (RTEC: news, chart, profile).
Prudential analyst Shekhar Pramanick chopped his recommendation to "hold" from "buy" and his price target to $25 from $45 citing competition concerns and uncertainty in the semiconductor industry.
Rudolph shares were down $6.53, or 28 percent, to $16.61 in early afternoon action.
"While we had originally been more skeptical of the threat of a KLA-Tencor (KLAC: news, chart, profile) tool given that there had been several unsuccessful attempts by KLAC in the last couple of years to develop a metal metrology tool, our checks suggest KLAC has recently achieved a critical milestone in the development of its metrology tool, gone from experimental setup to a full-fledged wafer tool," Pramanick wrote in a research note. Indeed, Pramanick believes the KLAC tool could be ready for shipments to customers for evaluation by early in the fourth quarter with production tool shipments in the first half of 2003.
While the progress of KLAC's competitive tool makes Pramanick cautious for 2003, nearer-term his concerns are based on uncertainty in the semiconductor industry.
"We believe that Street estimates for the second half for Rudolph could be optimistic given the recent cautionary stance semiconductor manufacturers have taken in regards to their 2H outlook," he said as he lowered his 2002 earnings per share forecast to 26 cents from 36 cents and his 2003 estimate to 93 cents a share from $1.10.
More broadly, analyst Steven Pelayo at Morgan Stanley estimated chip-sector capital spending will drop 20 percent, vs. his previous projection of 15 percent. For next year, he spending will increase 20 percent, more slowly than his previous estimate of 30 percent.
"(The) recovery (is) still underway, but consensus numbers suggest unrealistic growth," said Pelayo, who lowered his estimates for a slew of companies including Applied Materials (AMAT: news, chart, profile), Kulicke & Soffa (KLIC: news, chart, profile), Novellus Systems (NVLS: news, chart, profile) and Teradyne (TER: news, chart, profile).
The Philadelphia Semiconductor Index ($SOX: news, chart, profile) was off 4.5 percent in recent action. See Hardware Stocks.
Susan Lerner is a reporter for CBS.MarketWatch.com. |
