The slump continues apparently.......
biz.yahoo.com
Thursday August 20, 10:00 pm Eastern Time
Chip maker stocks tumble again amid grim outlook
(Adds byline, details, more analysts' comments)
By Therese Poletti
SAN FRANCISCO, Aug 20 (Reuters) - Shares of many U.S. semiconductor companies, including chip giant Intel Corp., tumbled again Thursday, amid more bearish comments on Wall Street and views that the current industry slump is not expected to turn around anytime soon.
On Wednesday, three chip companies had disappointing earnings announcements, led by LSI Logic Corp. (LSI - news), of Milpitas, Calif., which said its third-quarter results would be below Wall Street's already-lowered expectations.
After the market closed Wednesday, Santa Clara, Calif.-based National Semiconductor Corp. (NSM - news) said that it expects first- and second-quarter losses, as its order rates have been hurt by weakness in overall semiconductor demand.
Another chip maker, Norwood, Mass.-based Analog Devices Inc. ADI.N>, reported a much worse-than-expected third-quarter on Wednesday, citing an inventory build-up due to weak market conditions in Southeast Asia and Japan.
Then Thursday, Merrill Lynch analyst Tom Kurlak downgraded the world's largest chip maker, Intel Corp. (INTC - news), of Santa Clara and Dallas-based Texas Instruments Inc. (TXN - news).
''Little growth in orders at major electronics OEMs (original equipment manufacturers) including companies such as Hewlett-Packard Co. (HWP - news), International Business Machines Corp. (IBM - news) and Tektronix Inc. (TEK - news), do not argue well for a semiconductor recovery,'' Kurlak said in his note on Texas Instruments, which he downgraded to ''accumulate'' from ''buy.''
Semiconductor stocks were falling across the board, along with the broader market which was shaken by the news that the United States had bombed ''terrorist-related'' bases in Afghanistan and Sudan, which are believed to be behind the bombings of the two U.S. embassies in Africa last week.
Intel tumbled $3.56 to $86 on Nasdaq, where it the most active issue. National Semi dropped $2 to $11.56, Micron Technology Inc. lost $2.124 to $32.19, LSI Logic eased 69 cents to $15.125, Analog Devices fell $1.69 to $19.75, Texas Instruments slid $1.625 to $58.875 and Advanced Micro Devices Inc. slipped $1 to $17.81, all on the New York Stock Exchange.
''There is nothing good coming out of them,'' said one technology trader. ''The overall feeling is they have been beat up pretty badly but they still have a little bit more to go.''
On Wednesday, LSI Chairman Wilfred Corrigan said in LSI's statement that the current three-year industry downturn is the longest-running slump the industry has seen.
''Yes this is the longest downturn,'' Mark Edelstone, a Morgan Stanley Dean Witter analyst, said.
''Things have been bad since early this year and they haven't really changed,'' Drew Peck, an SG Cowen & Co. analyst, said. ''What I've seen is some noise generated by swings in inventory, one week things look better, the next things look grim. In between, things are just soft, it's not horrendous but things are not very good out there.''
The Semiconductor Industry Association, an industry trade group based in San Jose, Calif., said in June that it expects global sales of the $134.6 billion industry to drop 1.8 percent in 1998, largely due to Asia's economic troubles.
Jeff Weir, a spokesman for the SIA, said that the group's current forecast is ''obviously being overtaken by events,'' but that the SIA will not issue another forecast until November.
''If we were doing another forecast, it would probably mirror some of what the major companies have said about their own forecasts,'' Weir said. ''Asia ... is taking more of a bite out of sales than people thought possible. The Asia and Japan issues are not showing signs of abating.''
Edelstone, however, believes there is some turnaround for companies that supply to the PC market.
''Even National, which is struggling, has seen a big uptick in orders to the PC industry in the last three weeks. Those companies that are better positioned, like Intel, can show better results in the third and fourth quarters.''
Edelstone's remarks about Intel directly oppose Kurlak's. In his downgrade of Intel, Kurlak said that because of the mix toward lower-priced products, shortages of low-priced processors and ample supply of more costly processors, he believes Intel's third-quarter sales could fall short of expectations.
Kurlak also said that it is possible that Intel is losing more sales to Advanced Micro Devices, which develops lower-cost Intel clones, as the PC industry is selling more products at the lower-end of the market.
Intel is expected to introduce its next version of its Celeron chip for the ''basic,'' or low-cost PC market on Monday, code-named Mendocino. Kurlak pointed out in his note that Celeron and the low-priced Pentium II chips are now among Intel's fastest-growing processors.
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More Quotes
and News:
Hewlett-Packard Co (NYSE:HWP - news)Intel Corp (Nasdaq:INTC - news)International Business Machines Corp (NYSE:IBM - news)LSI Logic Corp (NYSE:LSI - news)National Semiconductor Corp (NYSE:NSM - news)Tektronix Inc (NYSE:TEK - news)Texas Instruments Inc (NYSE:TXN - news)
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