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Technology Stocks : Semi Equipment Analysis

SOXX 328.78

+2.9%

Jan 9 4:00 PM EST

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To: Return to Sender who wrote (56328)	5/16/2012 7:14:36 PM
From: Donald Wennerstrom	1 Recommendation Read Replies (1) of 95703

Tech stocks weighed down by chip sector 4:42 PM ET 5/16/12 \| Marketwatch SAN FRANCISCO (MarketWatch) -- Technology stocks were weighed down by selling pressure in the chip sector on Wednesday, after a J.P. Morgan analyst sounded a bearish tone on the group. The Nasdaq ( COMP) slipped nearly 1% to close at 2,874. The Philadelphia Semiconductor Index( SOX) slipped 1.7% as the Morgan Stanley High-Tech Index ( MSH) fell by 1.3%. Among makers of semiconductor manufacturing tools, KLA-Tencor ( KLAC), Lam Research ( LRCX) and Novellus ( NVLS) were each down 5%. Lam and Novellus are in the process of merging. Christopher Blansett of J.P. Morgan downgraded the three stocks to underweight, or the equivalent of sell. In a note to clients, the analyst predicted "a downtick" in capital expenditures by chip foundries in the second half of the year, and that capital spending in the memory and logic sectors of the business will be lower than many investors expect. "At this time demand momentum for semi equipment appears to be slowing, and we think news flow associated with semi capex is likely to turn negative as we head into the summer," Blansett wrote. He maintained his neutral rating on sector leader Applied Materials ( AMATwhich reports second fiscal quarter results on Thursday afternoon. He noted that the stock's recent losses has priced in much of the weakness he expects for the sector. Applied shares fell 1.4% to close at $10.66. Offsetting the declines somewhat for the chip group was Micron Technology ( MUwhich was up 2% closing at $6.15 after some brokers issued positive notes on the company's expected merger with bankrupt Japanese chip maker Elpida, which is currently in negotiations.

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