I would change this headline to "Plunge"
Chip Stocks Fall on Recovery Concerns
By Duncan Martell
SAN FRANCISCO (Reuters) - Shares of chip companies fell on Monday, sending the Philadelphia Semiconductor Index sliding more than 5 percent on concerns that an industry recovery may arrive later than expected.
Prices for microprocessors, the brains of personal computers, and memory chips, widely used in PCs, fell last week as demand remained weak. Also, National Semiconductor Corp. (NYSE:NSM - News) warned on Thursday that its quarterly revenues would lag its forecast, due to weak PC demand.
"Soft prices are more likely the result of slightly weaker seasonal demand rather than an excess of supply," wrote Salomon Smith Barney analyst Jonathan Joseph in a note to clients.
The Philadelphia Semiconductor Index (Philadelphia:^SOXX - News) fell 5.8 percent to 283.84, its lowest since mid-November 1998. Shares of Intel Corp. (NasdaqNM:INTC - News) fell 4.4 percent, or 76 cents, to $15.93 on Nasdaq. National Semiconductor (NYSE:NSM - News) fell 6.9 percent, or $1.17, to $15.71, and graphics chipmaker Nvidia Corp. (NasdaqNM:NVDA - News) tumbled 8.6 percent, or 80 cents, to $8.55.
National Semiconductor joined a host of other companies tied to the personal computer market, including Nvidia, that have changed guidance or said the PC market was weaker than previously expected in the second quarter.
In addition, a resumption in spending on information technology by large companies is perhaps farther off than earlier thought, as corporations wait for profits to turn back up before beefing up on IT spending.
"The challenge currently facing the computer hardware industry is the continuing push out in IT demand into calendar 2003 at the earliest and the subsequent pricing pressure that is continuing as vendors compete for less business," wrote Dan Niles, an analyst at Lehman Brothers, in a report.
Shares of Dell Computer Corp. (NasdaqNM:DELL - News), the No. 2 maker of PCs, fell 3.6 percent, or 87 cents, to $23.26; Hewlett-Packard Co. (NYSE:HPQ - News) fell 5.1 percent, or 65 cents, to $12.15; and International Business Machines Corp. (NYSE:IBM - News) declined 2.7 percent, or $1.82, to $66.12.
Shares of communications and specialty chipmakers fell, too. Broadcom Corp. (NasdaqNM:BRCM - News) slid 6.8 percent, or $1.14, to $15.71; PMC-Sierra Inc. (NasdaqNM:PMCS - News) fell 8.7 percent, or 76 cents, to $7.89; and Applied Micro Circuits (NasdaqNM:AMCC - News) dropped 5.9 percent, or 27 cents, to $4.32.
Shares of Texas Instruments Inc. (NYSE:TXN - News), the largest maker of semiconductors for cell phones, declined 8.1 percent, or $1.62, to $18.35.
Also last week the Semiconductor Industry Association reported that European semiconductor sales fell 4 percent in June from May, as overall chip sales around the globe were flat for that period.
Shares of chip-equipment companies also weakened. Applied Materials Inc. (NasdaqNM:AMAT - News) declined 6.9 percent, or 92 cents, to $12.78; KLA-Tencor Corp. (NasdaqNM:KLAC - News) fell 4.9 percent, or $1.80, to $35.23; and Novellus Systems Inc. (NasdaqNM:NVLS - News) dropped 4.7 percent, or $1.18, to $24.15.
All but one of the 17 companies that make up the Philadelphia Semiconductor Index fell on Monday. The sole exception was Advanced Micro Devices Inc. (NYSE:AMD - News), Intel's principal rival in the market for PC microprocessors.
Shares of AMD gained on a bullish article in financial newspaper Barron's, which hailed AMD as having the "next big thing" with an eighth-generation processor code-named Hammer.
Barron's cited Fred Hickey, publisher of the newsletter High-Tech Strategist, as saying AMD's Hammer chips could give the company a multiyear lead on Intel. AMD shares rose 21 cents, or 2.9 percent, to $7.52. |
