Note the bolded paragraph below, in which Mr. Murphy says that he doubts a Lucent/ASND merger will happen because, among other things, ASND will be trading 50% higher in 6 months:
(COMTEX) Strong PC Outlook over 4-5 Quarters Should Buoy Technology S
Strong PC Outlook over 4-5 Quarters Should Buoy Technology Stocks, Industry
Guru Murphy Predicts
SAN DIEGO (Oct. 21) BUSINESS WIRE -Oct. 21, 1997--Worldwide strength in
the personal computer sales and affiliated supplier businesses bode
well for technology stocks over the next 4-5 quarters, a leading
industry guru said today.
Michael Murphy, editor of the California Technology Stock Letter, said
that despite Intel Corp's (NASDAQ:INTC) recent cautionary
pronouncements about revenue growth, "Everywhere else we check we're
finding the PC business is very strong and should remain strong for the
next four quarters as worldwide the conversion to Windows 95 and
Windows NT continues."
Murphy, author of the soon-to-be-released book, "Every Investor's Guide
to High Tech and Mutual Funds," is the keynote speaker at the 1997
Informed Investors Electronics & Technology Forum Sunday morning Nov. 2
in San Diego.
Companies scheduled to give analyst-style presentations to individual
investors include Credence Systems (NASDAQ:CMOS), In Focus Systems
(NASDAQ:INFS), Trimble Navigation (NASDAQ:TRMB), Learnout & Hauspie
(NASDAQ:LHSPF) and Watkins-Johnson (NYSE:WJ). Notice of participation
is pending from several other companies. Up to eight companies may
present.
The Forum runs from 8 a.m. to noon at the Mission Valley DoubleTree
Hotel. The cost is $15 pre-paid, $20 at the door which includes a
continental breakfast served at 7:30. Investors unable to attend may
order tapes of the Forum for $25 for four company presentations and
Murphy's commentary. To register or order tapes, call Informed
Investors Forum at 800/992-4683.
"Intel is very careful and always tells analysts what its customers are
telling them," Murphy said. "But what needs to be known is that
Intel's customers are changing the model they use in ordering. Many
more are following Dell Computer (NASDAQ:DELL) and Compaq's (NYSE:CPQ)
lead and following a build-to-suit strategy."
Further, according to Murphy, many PC retailers are adopting a "just in time" distribution model to tighten the retail channel such that
retailers will re-order PCs as they are sold off the shelves. This
reduces the level of inventory exposure.
"Also, it gives the PC maker the opportunity to order the specific
chips the retail customers want," Murphy said. "If Pentium II machines
are popular, they'll order Pentium II chips, etc."
Murphy predicts Intel will announce "sometime in November" that its
revenue projections will be better than earlier thought. By then, he
said, the inventory adjustments will have been absorbed and the
underlying strength of the overall PC market will prevail.
Murphy believes other chip makers, including Advanced Micro Devices
(NYSE:AMD) and Cyrix (NASDAQ:CYRX), "will ship all they can produce
because PC makers want alternatives to Intel chips." But production
problems remain a hazard for the second-tier chipmakers, he cautioned.
Strong quarterly earnings reports from Microsoft (NASDAQ:MSFT) and IBM
(NYSE:IBM) came as no surprise to Murphy. "While the summer quarter
always has cross currents and is the weakest quarter of the year for
techs, it's not surprising that Microsoft and IBM had good earnings.
And the fourth quarter will shape up to be strong."
Even companies that reported weaker-than-expected earnings, such as LSI
Logic (NYSE:LSI), should rebound in the fourth quarter, Murphy said.
Murphy doesn't believe the rumored Lucent Technologies (NYSE:LU)
acquisition of Ascend Communications (NASDAQ:ASND) will materialize.
"Lucent can get most of what it wants by partnering with Ascend," he
said. "Also, why would Ascend want to sell out at this price when in
six months, with it getting its acquisition of Cascade under its belt
and improving business, its stock could be worth 50 percent more?"
Overall, Murphy said the strong PC market will lift related industries
and suppliers including disk drive makers, semiconductor manufacturers
and semiconductor equipment manufacturers "from Applied Materials
(NASDAQ:AMAT) on down."
Among the companies Murphy anticipates will benefit from a strong PC
climate are Seagate (NYSE:SEG), Western Digital (NYSE:WDC), Cirrus
Logic (NASDAQ:CRUS), IDT (NASDAQ:IDTC), and Cypress Semiconductor
(NYSE:CY).
"Mattson Technologies (NASDAQ:MTSN) is our favorite among he semi
equipment makers," Murphy added.
Forum organizer Informed Investors of Sacramento has been providing
investment education to individual investors since 1993. For more
information, call 800/992-4683.
-0- nc/sf* dc/sf
CONTACT: Informed Investors Inc.
Bob Taylor/Tim Quast/Steve Chanecka,
916/448-8222 or 800/992-4683
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