NEW YORK -(Dow Jones)- Soundview Financial Group Inc. downgraded SDL
Inc.'s short-term investment rating on the company to "hold" from "buy"
as the company's semiconductor-equipment operations suffer from a drop
in prices.
In a research note, Soundview analyst Kevin Slocum said he also
trimmed his 1998 earnings estimate for the company to 60 cents a share
from 70 cents, and his 1999 projection to $1.10 from $1.15.
Six analysts surveyed by First Call, on average, expect the San Jose,
Calif.-based maker of opto-electronic equipment to earn 69 cents a share
for 1998 and $1.18 for 1999. That would compare with a loss of $1.83 a
share in 1997.
Other market watchers agreed with Slocum's forecast.
Hambrecht & Quist Inc. analyst Jeffrey Lipton said he cut his
third-quarter projection to 16 cents a share from 18 cents. The mean
analyst estimate, meanwhile, sees SDL earning 17 cents a share in the
quarter, flat with the year-ago quarter.
Lipton explained that the company's business, split between
telecommunications-equipment manufacturing and semiconductor lasers, has
suffered from sluggish sales on the non-telecom side.
"The telecommunications business is tracking ahead of expectations,"
he said, but not enough to offset lethargic sales of other products.
Preferred Capital Markets analyst J.D. Abouchar was more specific:
Because semiconductor laser prices have dropped, companies like SDL must
fight to sustain margins and top-line growth by growing dynamically, he
said.
Unfortunately for SDL, the company hasn't displayed the necessary
growth to defend against a declining price curve, Abouchar said. And he
isn't predicting a dramatic turnaround, either. The analyst expects
SDL's laser sales to rise by about 10% to 15% "over the next year or
two."
The company declined to comment. |
