From Briefing.com: 8:22AM Semi equipment stocks vulnerable to profit-taking - Goldman Sachs : Goldman Sachs expects Q3 semi equipment orders to be up 10-15% sequentially and for revs and earnings to meet expectations; firm believes the equipment co's will guide for moderate Q4 sequential order growth of about 5%, which they believe will cause a pullback in the stocks given the recent rally and the fact that the semi equipment stocks continue to react harshly to co-specific bad news; firm encourages investors to buy the stocks after the pullback, as they believe that we are entering a cyclical recovery and the stocks will not ultimately peak for the cycle until AMAT reaches 15% EBITDA margins.
8:13AM Cree investigation concludes that Hunter allegations lack merit (CREE) 19.09: Co announced that the special committee of its Board of Directors has completed its previously announced investigation into allegations of corporate wrongdoing made by Eric and Jocelyn Hunter in court filings and otherwise. The report states that the "Committee did not discover any evidence to support any of the allegations contained in [the Hunters'] Complaint or pre-litigation correspondence. Based on the Investigation, the Committee concludes all of the allegations lack merit." Cree also noted that the Hunters stated in a court filing Thursday that they have decided to dismiss without prejudice their claims alleging federal securities fraud and unfair or deceptive trade practices.
8:12AM CIBC upgrades RFMD and TQNT as plays on the strong handset mkt : CIBC is upgrading RFMD and TQNT from Sector Underperform to Sector Perform to play the handset trends. Firm says trends in the handset industry remain particularly robust and it expects total handset sell-in to exceed 500 mln units for the year. Firm continues to favor SWKS, CREE, NOK, and KOPN to play the positive handset trends.... Also, firm says trends in wireless infrastructure are improving slightly after more than two long years. (see related Piper commentary on InPlay 07:58 ET). CIBC suggests REMC, UTSI and ARXX as attractively valued vehicles to play the improving trends in this group... Finally, firm is downgrading to Sector Underperform: CLTK and SMDI; and VLNC to Sector Underperform - Speculative.
8:11AM Lattice Semi cut to Underperform at SG Cowen (LSCC) 7.89: The downgrade from Mkt Perform is based on structural changes in the PLD industry that have impaired LSCC's ability to compete in its core CPLD business. Firm is also concerned by LSCC's lack of clear direction, an expense structure that is too high, and high exposure to the declining SPLD market. Firm's checks indicate that many OEMs are now focusing only on ALTR and XLNX for both FPGA and CPLDs, and that this competitive change appears to be accelerating.
7:58AM Wireless infrastructure contracts spike in Q3 -- Piper Jaffray : Piper Jaffray reports that wireless infrastructure vendor contract awards for 2/2.5/2.75 G (excludes 3G) equipment spiked in Q3 and exceeded $6 bln for the first time since Q4 2001. Contract awards of $6.4 bln, were up 64% sequentially and 170% yoy. ERICY led all vendors with a 34% share or $2.2 bln. Winners: Ericsson, Nortel Networks, Lucent and Siemens. Losers: Nokia and Motorola.
7:51AM Sigma Designs started with a Mkt Outperform at Rodman & Renshaw; target $16 (SIGM) 8.69: Rodman & Renshaw initiates coverage with a Mkt Outperform rating and $16 target; firm says SIGM is an early leader in the emerging HDTV and advanced set-top silicon space, has gained an impressive set of design wins, and is set to ramp earnings growth; firm notes that SIGM reported positive EPS in Q1, and they are expecting the co to grow earnings at a 80% compound annual growth rate (PEG ratio is 0.6x).
7:46AM Asian markets rally on back of U.S. claims data : Asian markets post very strong gains as improving U.S. claims data (out yesterday) bolster confidence in a strengthening U.S. economy and help offset forex concerns: Japan +2.4%, S. Korea +2.9%, Hong Kong +1.1%, Malaysia +1.4%. The Nikkei's rise of more than 2% came despite further weakening in the dollar against the yen to 3-yr lows.
7:45AM LM Ericsson target raised to $22 at Piper (ERICY) 17.21: Piper Jaffray is increasing its target on ERICY from $16 to $22 as the firm raises its outlook for the wireless infrastructure industry for 2004 and 2005. The firm now believes the infrastructure market will grow by 3% in 2004 versus its prior forecast of down 4%. Based on its market leading position, firm believes co is poised to be a primary beneficiary of improved business conditions.
7:43AM FOCUS Enhancements started with a Mkt Outperform at Rodman & Renshaw; target $5 (FCSE) 2.81: Rodman & Renshaw initiates coverage with a Mkt Outperform rating and $5 target; co began shipping its FS454 video conversion chip to MSFT in Q3 for its Xbox game console, and firm expects FCSE to gain increasing share throughout 2003-04 and to be a prime beneficiary as MSFT ramps up for its strong seasonal holiday sales; also, FCSE's video conversion chips are strategically positioned in two separate INTC reference designs for the digital media center mkt, key players in the professional digital camera space such as Ikegami and JVC have also selected FCSE systems, and the co is a key contributor alongside TXN for the Ultra Wide band (UWB) standard.
7:37AM Monolithic reduces Q3 revenue forecast (MOSY) 8.20: -- Update -- Co. sees Q3 (Sep) revenues at $3.5 mln,, previous guidance was for $4.5-5.0 mln, Reuters Research estimate is $4.7 mln. Co. cites a shortfall in revenue recognized under licensing as the reason.
7:28AM Applied Materials added to Merrill Lynch's Focus 1 List (AMAT) 20.55: Merrill Lynch adds AMAT to their Focus 1 List, saying the co is well-positioned at the start of the cycle for several reasons: 1) broad product portfolio provides extra leverage to technology and capacity buys, 2) leverage to an accelerating Taiwan, 3) co has used the downturn to reshape itself into a leaner co and should see strong margin leverage as orders increase, 4) firm's analysis shows an increased likelihood for industry growth in excess of 25% in 2004, with the potential for follow-on growth in 2005, and 5) Q4 is on track and orders are on the rise. Target is $27.50.
7:26AM American Tower names new CEO (AMT) 11.10: Co names James D. Taiclet CEO, succeeding Steven B. Dodge in this role. Steve Dodge will continue as Chairman of American Tower's Board of Directors.
7:22AM Cisco and IBM unveil self-healing infrastructure (CSCO) 20.95: Co and IBM announce a set of open software technologies designed to increase the end-to-end intelligence and responsiveness of the global IT infrastructure -- representing a major advancement in the development of "self-healing" computing systems and networks. IBM plans to start integrating these new autonomic technologies into its entire portfolio of products immediately. In the second phase, Cisco intends to integrate these technologies into its products and services.
7:20AM Texas Instruments upgraded to Hold at Deutsche (TXN) 24.99: -- Update -- Deutsche Securities upgrades to Hold from Sell and raises their target to $22 from $16 based on the likelihood for continued bullishness towards semi stocks and upside potential for consensus EPS forecasts; while a positive reporting season suggests trading upside for the stock, firm thinks the current valuation of 36x their CY04 est remains stretched.
7:16AM Intel upgraded at Deutsche (INTC) 29.77: Deutsche Securities upgrades to Buy from Hold and raises their target to $35 from $26; while the mkt is generally positive about INTC's Q3 results and Q4 guidance, they believe that the upside represented by their $0.30 Q4 est (vs $0.26 consensus) provides a positive near-term catalyst for the stock; firm raises their 2004-05 ests well above consensus, as they believe continued contribution of Centrino and HyperThreading will help CY04 gross margins, while INTC's 300mm ramp could add 600-700bps to the gross margins in 2005. While the stock's 2004 valuation (29x) is close to former pre-bubble peak levels of 30x, the mkt's sensitivity to valuation is low and the stock is cheap vs peers TXN (36x), XLNX (37x), and ALTR (39x).
7:02AM Early Research Calls : Deutsche Bank upgrading INTC to Buy from Hold; also upgrading TXN to Hold from Sell... Merrill Lynch placing AMAT on the Focus 1 List with a $27.50 tgt; also calling TXT price decline unwarranted... UBS upgrading URBN to Buy from Neutral.. JMP Sec upgrading JNPR and CIEN to Mkt Perform from Underperform... Wachovia upgrading JNPR to Mkt Perform from Underperform... Smith Barney downgrading BSG to Sell from Hold with $12 tgt; also upgrading SOV to Buy from Hold... Piper Jaffray upgrading PWAV to Mkt Perform from Underperform... CFSB upgrading PLCE to Neutral from Underperform... BofA initiating coverage on XRAY with Buy and $55 tgt.
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