Bear Hunt: It's Two Steps Forward, One Step Back for Semis
By Eric Moskowitz
Staff Reporter
3/3/98 6:22 PM ET
When all is well in the semiconductor stock world, it usually works like this: The
semi cap equipment makers lead, and the semiconductor makers follow. But this year,
it's been the semi makers like Intel (INTC:Nasdaq) leading the charge.
That's been a disturbing trend for the group as a whole, even while it's soared, as TSC
noted in a story a couple of weeks ago. Now, with some influential analysts turning
bearish this week, it seems 1998's impressive run could be in jeopardy.
While both semi cap and semi makers are up about 15%, the sentiment is shifting just
as the preannouncement season for the first quarter begins. Since this industry has
rebounded so swiftly from its tech selloff lows in December, expect a tremendous
amount of volatility as it attempts to bypass the Asian contagion.
The latest development: Merrill Lynch semiconductor analyst Tom Kurlak entered
the fray Tuesday with a bearish forecast. A longtime Intel bull until last fall, when
he astutely called for a semiconductor slowdown, Kurlak told a Merrill tech
conference audience that "the recent semiconductor rally is not sustainable on a
fundamental basis."
Kurlak contended that semiconductor weakness due to excess capacity will lead the
entire sector lower. "Expect new lows in semiconductor stocks over summer months
and into the fall," he says. Kurlak sees a flat first quarter for Intel and little change in
the second due to slower end user demand. He rates the stock a hold. On the news,
Intel shot down 2 5/16, or 2.6%, as did much of the semi sector toward the end of the
trading day. |
