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From briefing.com "LSCC. With implications for Intel. After the close Monday, Lattice Semiconductor (LSCC) reported fiscal second quarter (Sep) earnings of $0.42 per share. This was the classic "penny ahead" of expectations, but was down 34% from the prior year profit of $0.62 per share. Revenues dropped an unhealthy 24.9% - LSCC lost one-quarter of their business. The stock played out the typical earnings season move, with a gain ahead of the report on "expectations that it would beat expectations" (sic). In fact, that is what happened to a whole list of stocks on Monday, as they rose ahead of earnings, then virtually all beat consensus estimates: Broadcom (BRCM ) two cents ahead, Cube Systems (CUBE ) a penny ahead, Avant! (AVNT ) two cents ahead, and Earthlink (ELNK ) eight cents above expectations. Starting to get the idea that it is a loaded coin? Stocks have been beaten up so much that a bounce on decent earnings news is fully justified. As Briefing.com has written on this page numerous times, however, the question for LSCC and so many other stocks is significant whether there is growth ahead. LSCC stock has trended steadily lower from over 70 last summer. Now, there is optimism building that the demand for semiconductors is improving as inventory problems have eased. That leads us to the big one: Intel (INTC) due to report after the close Tuesday. INTC has already indicated that this quarter will be better than originally believed, but what they say about the fourth quarter will have a big impact, on INTC and many other stocks. The optimism in semiconductors now basically revolves around "things aren't so bad as they seem," rather than "earnings and revenue will be up sharply from last year." This isn't a growth industry again, yet. There is reason for optimism, but reason for caution as well. Don't plan on an earnings bounce turning into a steadily higher stock price for these stocks unless final demand picks up through 1999." |
