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Chips pace hardware sector gains
By Binti Harvey, CBS MarketWatch
Last Update: 12:34 PM ET Dec 30, 1998 NewsWatch
NEW YORK (CBS.MW) -- Semiconductor shares zoomed higher Wednesday, and several computer hardware stocks were recharged.
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Updated:
12/30/98 12:28:00 PM ET
Optimism about leading chip makers Advanced Micro Devices (AMD) and Texas Instruments (TXN) sparked buying in the chip sector. Analysts from Prudential Securities and BT Alex. Brown raised earnings estimates for AMD on reports that the company may have sold out of K6-2 processors in the fourth quarter.
Erika Klauer, a chip analyst for BT Alex. Brown, boosted her fourth-quarter estimate to 19 cents a share from 15 cents on stronger-than-expected demand for AMD's microprocessors, while Prudential's Hans Mosesmann raised his estimate to 30 cents from 14 cents.
AMD shares jumped 2 3/16 to 29 11/16 on the positive outlook.
Industry leader and AMD rival Intel (INTC) also gained on the news, as Klauer cited aggressive pricing of Intel's Celeron as a potential threat to AMD.
Klauer also noted that AMD continues to see strong demand from computer manufacturers Compaq (CPQ), which was up 15/16 to 42 5/8, and Hewlett-Packard (HWP), up 1 9/16 to 69 13/16. Other computer makers lagged, as Dell (DELL) lost 3/4 to 73 13/16 and IBM (IBM) dipped 1/8 to 187. Apple (AAPL) shares were off 3/4 at 40 1/16.
Texas Instruments gained 3 1/4 to 62 1/4 after Dow Jones reported that an executive from the company sees stronger fourth-quarter demand in the company's Asian market continuing into the first quarter.
Programmable logic device makers also propelled chip-stock gains, as Xilinx (XLNX) jumped 3 to 62 1/8, Altera (ALTR) rose 2 1/2 to 57 9/16 and Lattice (LSCC) rose 1 3/4 to 41 1/2. Many analysts find these stocks more attractive than others in the chip sector because they are less sensitive to seasonal buying factors and consequently are more likely to sustain their strength in the first quarter.
The Philadelphia Semiconductor Index gained 3.7 percent, while the Goldman Sachs Computer Hardware Index rose 0.8 percent.
Binti Harvey is a reporter for CBS MarketWatch.
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