Some good news maybe
Semiconductor Market is Bottoming Out, Will Rebound in 1999, NationsBanc
Montgomery Securities Semiconductor Analysts Tell Investors
SAN FRANCISCO (Sept. 17) BUSINESS WIRE -Sept. 17, 1998--One of the most
brutal downturns in the history of the semiconductor industry is
starting to bottom out, setting the stage for a rebound during 1999,
according to the analysts who follow the industry for NationsBanc
Montgomery Securities (NMS).
"We think the industry is beginning to form a bottom. We see
microprocessors leading the recovery, as end-users enter another
upgrade cycle caused by the introduction of Windows NT 5.0," said
Jonathan Joseph, an NMS semiconductor analyst.
Joseph's comments came at the 28th Annual NationsBanc Montgomery
Securities Investment Conference, which is running this week in San
Francisco. The conference, which is the firm's largest to date,
features 245 companies with a combined market capitalization of $1.6
trillion making presentations to more than 1,900 portfolio managers.
These managers represent 280 different institutions with a combined
$3.5 trillion in assets under management.
Joseph was joined at the conference's annual semiconductor industry
workshop by colleagues Brett Hodess, Douglas Lee and Clark Westmont.
For a recovery to occur, the personal computer industry needs to
continue to grow, since 54 percent of all semiconductors are used in
manufacturing PCs, Joseph said. Meanwhile, the communications industry
must continue its rollout of new telecommunications equipment, such as
digital wireless handsets, which have been selling briskly, and
semiconductor-based networking system software.
In addition, for a solid recovery to take place, the worldwide excess
semiconductor manufacturing capacity must be absorbed, while
leading-edge manufacturers must continue with their announced plans to
convert their production facilities to the state-of-the-art 0.18
microns standard.
An added factor in a potential recovery of the U.S.-based industry is
the dramatic drop in production by the Japanese and Korean
manufacturers, the NMS analysts said. With the Asian economic crisis
continuing, neither Japanese nor Korean manufacturers are expected to
be influential players in the semiconductor market in the coming years,
Joseph said.
Joseph's stock recommendations among semiconductor manufacturers
include Intel Corporation(1), Micron Technology, Inc.(1) and Texas
Instruments Inc.
Hodess, who follows the stocks of semiconductor equipment
manufacturers, is forecasting an industry turnaround during the second
half of 1999. He expects manufacturers offering new technological
advancements to lead the way. His recommended stocks in this area
include Phototronics(1), Dupont Photomask, Inc.(1), Applied Materials,
Inc.(1), Novellus Systems, Inc.(1), Teradyne, Inc., Veeco Instruments,
Inc.(1) and Ultratech Stepper, Inc.(1)
Lee tracks companies that make analog devices, which are workhorse
semiconductors that perform such tasks as power management,
amplification and signal transmission. This is a $20-$22 billion market
growing at 10 to 15 percent annually that has applications in virtually
all key electronics products, Lee said. While these companies are in a
very attractive market segment, their stocks have been weak based on
investor fears about a slowdown in end-market demand and pricing
pressures.
Lee said there were some encouraging signs in the market, such as the
continued strength of the PC market, and he offered three stock picks:
Analog Devices, Inc.(1), Power Integrations, Inc.(1) and Micrel,
Inc.(1)
Westmont alerted investors to the coming opportunity in semiconductors
for communications equipment, particular those that enable Internet
communication. He said that major network equipment manufacturers are
beginning to outsource those components and that this sector is growing
rapidly, with revenues increasing more than 30 percent annually.
NationsBanc Montgomery Securities LLC (NMS), a subsidiary of
NationsBank Corporation, is a full-service investment bank and
brokerage firm with approximately $900 million of regulatory capital.
The company provides research, trading and issuance in the equity and
fixed-income markets (high yield, emerging markets, high grade and
mortgage-backed markets). Other services include M&A advisory,
financial buyer coverage, loan syndications, global investment banking,
real estate finance, mortgage finance, money markets and the primary
dealer.
Through NationsBank, NMS clients can also access products and services
that include senior bank debt, bridge financing, real estate banking,
treasury management, trade finance and risk management (derivatives
products and foreign exchange).
NMS is a registered broker-dealer with the Securities and Exchange
Commission and is a member of the National Association of Securities
Dealers and the New York Stock Exchange. NMS employs more than 2,700
investment professionals. (1) NationsBanc Montgomery Securities LLC
currently maintains a market in this security. NationsBanc Montgomery Securities LLC
was manager or co-manager of a public offering and/or has
performed investment banking or other services for this company
in the last three years. |
