To all: More analysts opinions on the semi outlook. Jeff
Special Edition of The Wall Street Transcript on Electronics and Semiconductors
BusinessWire, Wednesday, November 04, 1998 at 12:58
NEW YORK--(BUSINESS WIRE)--Nov. 4, 1998--The Wall Street
Transcript has just made available an 88-page special edition produced
for the October 1998 SG Cowen Conference on Electronics and
Semiconductors. Featuring in-depth interviews with two top analysts
and 21 of the major companies in the sector, it offers an excellent
current review of the sector:
1) Two extensive interviews with top SG Cowen Securities on major
semiconductor topics of interest to investors:
Semiconductor Industry Outlook - Drew Peck. Describing the
current environment for semiconductors, Peck says: "We are in the
midst of a traumatic transition stemming from the plunge in PC pricing
during the past 24 months. Deflation has been a hallmark of the
semiconductor business since its inception, but at the moment, it's
nearly out of control." Looking forward, he sees volume responding to
the lower prices "ultimately we're going to see an elastic response.
The more price-sensitive markets, especially overseas, are ripe; we
could see a sharp boost in the adoption of both commercial and
consumer PCs. That means unit demand may offset the erosion in pricing
at some point." However, he emphasizes the growing presence of
semiconductors in all electrical products: "We are now beginning to
see the migration of the technology that made the personal computer
possible into a wide array of applications that everyone uses
everyday. The real opportunity lies in the transparent application of
extraordinary processing power to prosaic products. Few users will
ever be aware of the supercomputing power in their 1999 model
refrigerator or air conditioner, but they'll be well aware of the 15%
improvement in efficiency."
Semiconductor Equipment - Tia-Min Pang. The situation for
equipment companies is similar, according to Pang: "There are three
factors as I see it. There's Asian spending. There is also
over-capacity, which in turn has led to excess inventory.
Additionally, the advent of the sub-$1,000 PC has also affected
spending. Chip companies are being squeezed profit-wise, which in turn
affects capital spending." In reviewing the state of equipment stocks,
he says, "I would say that the larger companies are in the best
position to withstand the rest of this downturn, for a number of
reasons. First, they have cash. The smaller companies may not have.
Second, the larger companies, by and large, have broader product
lines. So in this day and age, when chip companies are looking for
solutions rather than just single product lines, larger companies can
offer these tailor-made solutions to chip manufacturing problems." He
adds, "If you are longer-term oriented and can truly wait two to three
years for investments to pay off. I think now is a pretty good time to
start building up positions in your portfolio."
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