Semiconductors . . . LSI Logic forecast first-quarter revenue of $370 million to $390 million because orders have declined, Chief Executive Wilfred Corrigan said. The average estimate of analysts surveyed by First Call was for revenue of $485 million.
Deutsche Bank upgraded its rating on STMicroelectronics to a hold from a sell. It told clients STM "reported relatively strong fourth quarter 2002 revenues driven by Telecoms and Flash in particular, although margins were somewhat disappointing... As we expect to make few changes to our recently revised 2003 forecasts we are upgrading STM shares to Hold."
Texas Instruments had a fourth-quarter profit, excluding certain items, of 6 cents a share. On that basis it was expected to earn 3 cents. Sales rose to $2.15 billion and beat a forecast the company rose last month.
Benjamin Reitzes at UBS Warburg said that SanDisk's announcement of a 15 percent decline in average selling prices (ASPs) during the fourth quarter suggested more than anticipated promotional activity. He also noted that SanDisk was comfortable with ASP declines of 35 to 40 percent in 2003. Earlier in the week, Infineon said it continued to expect an "ongoing difficult market environment with continued pricing pressure."
Texas Instruments reported results for the first quarter that were ahead of estimates at the top line, and ahead at the bottom line as well after eliminating one-time charges. Analysts are raising GAAP earnings estimates to $0.42 from $0.34 in 2003, and to $0.74 from $0.63 in 2004. TXN is no longer reporting pro-forma numbers. Better margin is the main factor behind the improvement - our revenue estimates are largely unchanged. The flat revenue outlook for the first quarter is better than seasonally normal, but think it's reasonable given the 0.96 book-to-bill and low customer inventory levels. The question is not whether TXN's business is bottoming - it clearly is. The more important question is whether the stock price makes sense. Had numbers above the street prior to the report, and we think we've been generous modeling TXN's improving results into our forecasts. However, at 34x calendar 2003E number, entering a seasonally slow first quarter, we find it difficult to understand how investors will make money on the stock. Analysts need to get closer to 2004, at which point the market may be willing to value the stock on out-year numbers, or need evidence that TXN's business is recovering.
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