Analyst Stuff, for what it's worth...
SAN FRANCISCO--(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).
ÿÿÿÿ"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.
ÿÿÿÿJoseph'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.
ÿÿÿÿJoseph was joined at the conference's annual semiconductor industry workshop by colleagues Brett Hodess, Douglas Lee and Clark Westmont.
ÿÿÿÿFor 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.
ÿÿÿÿIn 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.
ÿÿÿÿAn 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.
ÿÿÿÿJoseph's stock recommendations among semiconductor manufacturers include Intel Corporation(1), Micron Technology, Inc.(1) and Texas Instruments Inc.
ÿÿÿÿHodess, 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)
ÿÿÿÿLee 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.
ÿÿÿÿLee 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)
ÿÿÿÿWestmont 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.
ÿÿÿÿNationsBanc 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.
ÿÿÿÿThrough 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).
ÿÿÿÿNMS 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
ÿÿÿÿmarket in this security. NationsBanc Montgomery Securities LLC
ÿÿÿÿwas manager or co-manager of a public offering and/or has
ÿÿÿÿperformed investment banking or other services for this company
ÿÿÿÿin the last three years. |
