UPDATE 1-Communications chip stocks rise, led by Cypress
(Recasts 1st para, updates throughout, previous New York)
SAN FRANCISCO, May 2 (Reuters) - Optimism about second-quarter business fueled gains in communications chip stocks on Friday, led by Vitesse Semiconductor Corp. and Cypress Semiconductor Corp., which forecast better-than-expected results.
Vitesse Semiconductor Corp. shares climbed 52 cents, or about 16 percent, to $3.83, on the Nasdaq stock exchange. Cypress shares rose to an 8-month high at $10.56, up $1.08, or about 11 percent in active trade on the New York Stock Exchange. Cypress's stock price has more than doubled since early February.
Cypress, a maker of logic and memory chips, said late on Thursday it sees second-quarter revenues at about $200 million, or roughly $7 million above analysts' forecasts.
T.J. Rodgers, president and chief executive, cited strength in its wireless business after a higher than expected rebound in handsets.
"Our handset market appears to be coming back to life," he said in a conference call with analysts. "We also started shipping more higher density memories and had some market share gains, and we expect another up quarter in the next quarter."
Last week, worries about the sector prompted some analysts to downgrade chip stocks. Concern surfaced that possible inventory boosting ahead of the war and because of any impact from Severe Acute Respiratory Syndrome (SARS) had led to inflated quarterly shipments rather than actual demand.
CYPRESS, TSMC OPTIMISTIC
This week, the outlook turned different after Cypress' forecast.
"While we're somewhat surprised to see guidance being raised so early in the quarter, the improved outlook ... is indicative of how strong booking trends have been recently," Wachovia Securities analyst John Barton said in a note to clients.
However, analysts at SG Cowen were skeptical, saying they believe it is too early to be confident that Cypress will see 10.5 percent quarter-over-quarter revenue growth.
"Given the limited visibility offered by short lead times and the uncertain macro environment, we remain cautious on the outlook for the remaining two months of the quarter," an SG Cowen note said.
Cypress' bullish projection comes only days after Taiwan Semiconductor Manufacturing Co. Ltd.<2330.TW>, the world's largest contract chipmaker, forecast strong performance in the second quarter.
TSMC Chairman Morris Chang told analysts that his optimism was based on the strength of orders in all segments, including computer, consumer and communications.
The chip sector has been struggling to recover from its worst downturn ever as companies slashed plans to buy expensive new chip-making equipment, cut jobs and closed factories.
Shares of other communications chip makers also edged higher on Friday. Applied Micro Circuits Corp. shares gained 40 cents, or 9 percent, to $4.90, while PMC-Sierra Inc. rose 66 cents, or 8 percent to $9.24.
Shares of Texas Instruments Inc., the world's No. 1 maker of cell phone chips, climbed 78 cents to $19.33, up 4 percent.
The benchmark Philadelphia Stock Exchange semiconductor index <.SOXX> also rose, gaining 3 percent, to 343.34. (Additional reporting by Franklin Paul in New York and Yukari Iwatani in Chicago.) |
