08:47am EST 7-Jan-98 Lehman Brothers (Michael A. Gumport, CFA 1(212)526-) AMD
Semiconductors: 1998 Semiconductor Outlook (Part 3 of 3)
Ticker :
Today's Date : 01/07/98
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* 1998 SEMICONDUCTOR OUTLOOK -- PART III OF III. RATINGS SUMMARY RECAP AND EPS
CALENDAR/ ESTIMATES VS. FIRST CALL CONSENSUS.
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PART III OF III
SUMMARY: EXPECT THE BROAD THEME FOR 1998 CHIP STOCKS TO BE A SHIFT TOWARDS
RENEWED HIGH, LONG TERM GROWTH AND AWAY FROM TODAY'S FOCUS ON "DECELERATION AND
ASIA/PACIFIC". THAT SAID, HERE ARE THE UPS AND DOWNS WE ARE EXPECTING TO
DELIVER 30% CHIP STOCK APPRECIATION IN 1998: 1) In early January, tax
selling/window dressing ends; group goes up 0-20% (now complete), 2) Mid-January
4Q97 EPS reported at low end of consensus; group drops back 10% (any concern on
U.S. growth will exacerbate setback); 3) February seasonal rebound in orders
(plus cyclical strength from US expansion) resumes; group rises 30-50%; 4)
April-June seasonal strength peaks; group begins 25% selloff; 5) September-
December strength of DVD drives, internet appliances, digital imaging emerges,
pushes industry sales up 15% for the year (particularly strong 4Q comparisons)
and stocks rebound 25%. Overall 1998 gain: 30% (assuming modest growth in the
broad averages).
Summary of Changes
Rating Price Target
Old--New Old--New
AMD 1 3 $35 $28
ALSC 1 2 $16 $13
AVT 1 2 $82 $82
IDTI 1 2 $17 $16
INTC 2 2 $90 $90
IRF 1 2 $25 $20
LSI 2 2 $29 $27
LSCC 1 1 $75 $75
MU 2 4 $28 $27
NSM 1 2 $45 $40
PIXT V3 V2 $ 5 $ 5
RMTR 1 1 $14 $12
STM 1 1 $110 $95
TXN 1 1 $55 $55
VTSS 1 1 $55 $55
EPS ESTIMATES VS. FIRST CALL CONSENSUS (SEE NEXT PAGE)
Chip Stock Summary (Part 3, Cont'd) p.2
EPS CURRENT QUARTER AND ONE YEAR FORWARD ESTIMATES VS. FIRST CALL. The following
table details our current quarter (vs. First Call estimates) and next year (vs.
First Call estimates) estimates. Footnotes follow.
EPS CALENDAR/ ESTIMATES VS. FIRST CALL CONSENSUS
---Current Quarter--------- -Annual EPS------------------------
------------ ---This Year- -History----- ---Projections-------
Co. 01/06/98 -Rept -Last- --LB-- -1st - ---Last Year- --This- ---NextYear--
Tic Rec Price- -Date -Year- --Est. -Call- -Date --EPS-- --Year- LB est --1st-
--- --- ----- ----- ------ ------ ------ ----- ------- ------- ------ -Call-
AMD 3 $20 01/13 $-0.15@ $-0.10 $-0.13 12/96 $-0.51@ $-0.16 $ 0.65 $ 1.15
ALSC 2 $ 5 5/8 01/14 $-0.03 $-0.04 $-0.02 03/97 $-0.43@ $-0.20@ $ 0.25 $ 0.47
AVT 2 $64 7/16 01/21*$ 1.05 $ 1.06x$ 1.10 06/97 $ 4.25@ $ 4.35 $ 4.95 $ 5.31
IDTI 2 $10 1/4 01/14 $-0.55@ $ 0.00 $-0.01 03/97 $-0.54@ $ 0.08@ $ 0.60 $ 0.72
INTC 2 $73 1/8 01/13 $ 1.06 $ 0.88x$ 0.90 12/96 $ 2.90@ $ 3.78x $ 3.80 $ 4.11
IRF 2 $12 5/16 01/15*$ 0.07 $ 0.14 $ 0.14 06/97 $-0.84@ $ 0.70 $ 1.25 $ 1.20
LSCC 1 $49 1/8 01/12*$ 0.49 $ 0.57 $ 0.58 06/97 $ 1.96 $ 2.37 $ 2.65 $ 2.77
LSI 2 $22 3/16 01/22*$ 0.23 $ 0.19 $ 0.22 12/96 $ 1.09 $ 1.10@ $ 1.05 $ 1.23
MU 4 $26 7/8 03/16*$ 0.66@ $-0.22 $-0.12 08/97 $ 1.53@ $-0.45 $ 0.40 $ 1.15
NSM 2 $25 03/12 $ 0.17x $ 0.38x$ 0.39 05/97 $ 0.57x $ 1.65x $ 2.20 $ 2.20
PIXT V2$ 2 3/4 02/23*$-0.53 $-0.30 $-0.30 12/96 $-1.44 $-1.15 $-0.95 $-0.88
RMTR 1 $ 5 3/4 01/28*$ 0.02@ $-0.05 $-0.04 12/96 $-0.16@ $-0.23 $ 0.00 $ 0.01
STM 1 $61 7/16 01/21 $ 1.02 $ 0.91 $ 0.88 12/96 $ 4.50 $ 2.92 $ 3.80 $ 3.88
TXN 1 $47 1/4 01/21 $-0.07@^$ 0.53x$ 0.60 12/96 $0.67@x^$2.11@x^$ 2.40 $ 2.77
VTSS 1 $38 7/8 01/12 $ 0.17 $ 0.26 $ 0.26 09/97 $ 0.86 $ 1.18 $ 1.46 $ 1.42
XLNX 1 $37 3/8 01/20 $ 0.33 $ 0.38 $ 0.39 03/97 $ 1.39@ $ 1.58 $ 2.05 $ 1.99
*-Apprx.; r-Restricted, p-Pro Forma; e-estimate;
^-Includes discontinued operations.
@-UNUSUAL/NONRECUR. ITEMS IN EPS
QUARTERLY: AMD 4Q96 $-0.01; IDTI FY3Q97 $-.48 restructuring; MU FY2Q97 $+0.48
investment gain; RMTR 4Q96 $-0.02 incentive expense; TXN 4Q96 $+0.34 Samsung
back royalty, 4Q96 $-0.82 severance/ restructuring
ANNUAL: AMD 1996 $+0.15; ALSC FY97 $-0.32, FY98 $-0.10 inventory charge; AVT
FY97 $+0.02 restructuring; IDTI FY97 $-0.55 nonrecur/restructuring/inventory
charge, FY98 $+0.01 bad debt reversal/FX loss/marketing charge; INTC 1996 $-0.03
inventory write-down; IRF FY97 $-1.14 restructuring charge; LSI 1997 $-0.02
acquisition charge; MU FY97 $+0.51 investment gain; RMTR 1996 $-0.08; TXN 1996
$-0.37 misc. charges; 1997 $-0.18 PC divestiture; XLNX FY97 $-0.04 write-off
X-EXCLUDED ITEMS FROM EPS
QUARTERLY: AVT FY982Q excludes $0.35E gain on sale; INTC 4Q97 $-0.06 in process
R&D write-off; NSM 3Q97 Fairchild divestiture and all 1-time charges excluded
from historical numbers; TXN 4Q97 charge for purchase of Amati
ANNUAL: x-Excluded items: INTC 1996 $-0.06 in process R&D write-off; NSM
FY97/FY98 Fairchild divestiture and all 1-time charges excluded from historical
numbers; TXN 1996 $-1.01 SSi acquisition; 1997 $+7.95e Defense also other
divestitures charges and charge for Amati purchase |
