Leading chip analyst Kurlak leaves Merrill
By Bloomberg News
Special to CNET NEWS.COM
February 13, 1999, 1:35 p.m. PT
Semiconductor analyst Tom Kurlak resigned Merrill Lynch to join the Tiger Management
hedge fund, following a year of wrong-way forecasts on the chip industry.
Kurlak, who in 20 years at Merrill attracted a following of investors because of accurate predictions of
semiconductor sales, will become managing director of Tiger's technology investments at the end of the month.
Kurlak correctly forecast declines in the semiconductor industry in 1997 and early 1998.
In August, however, he lowered his rating on No. 1 chipmaker Intel shares to "long-term neutral" and the stock
climbed about 45 percent. In November said Advanced Micro Devices would benefit from higher demand for
low-priced computer chips, but the company last week warned that profit would be less than analysts expected.
"He was a legend in the industry, though recently he lost his edge," said analyst Claude Hazan of C.E. Unterberg
Towbin.
Intel chief executive Craig Barrett even poked fun at Merrill's inaccurate calls on his company at an analyst
meeting last year, joking that Merrill clients might be wondering why Intel's stock has run up after the analyst,
whom he didn't name, had been putting out gloomy forecasts since August. Intel had no comment on today's
announcement.
"For 20 years, I have been dispensing advice," Kurlak said in a statement from Tiger. "Now, I look forward to
begin to implement it with this new opportunity."
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Kurlak, whose resignation was first reported on CNBC, couldn't be reached for further comment. Merrill Lynch
said the companies Kurlak covers are under review and no replacement has been named.
"Tom Kurlak is one of the most influential analysts on Wall Street, " said Julian Robertson, chairman of Tiger
Management. "He has had a distinguished career on the sales side and we are thrilled and delighted that he will
continue his career with us on the buy side."
Kurlak turned bearish on the semiconductor industry on August 22, 1997, citing an oversupply of chips.
Semiconductor stocks tumbled soon afterward.
In March 1998, Kurlak said chip companies were poised for a "reality check" because of weak demand. The
very next day, Intel warned that first-quarter earnings would fall short of forecasts
because of reduced orders from PC makers. In April, Kurlak cut his rating on Intel to
"long-term accumulate" from "long-term buy," and was quoted on television saying
that the shares could fall as low as $60 from about $75, where they were trading the
day he spoke.
Intel shares touched a low for the year of 65.66 on June 3, less than two months
later.
"Tom was important and helpful in his day," said portfolio manager Graham Tanaka
of Tanaka Capital, which manages about $200 million. "But he wasn't right all the
time."
In August 1998, he warned that inexpensive personal computers requiring cheaper chips would eat into Intel's
profit. Since then, Intel stock has climbed as much as 67 percent to a record 143.63 on January 20. It fell 6.75 to
126.5 yesterday.
"Whether his call was right or wrong, the buy side always paid attention to what Tom Kurlak was thinking and
saying," said Philip Orlando, chief investment officer at Value Line Asset Management.
Kurlak has been more wrong than right lately, said Orlando, who owns shares of Intel. Investors still listened to
him, though, because Merrill's 16,000 brokers can promote their analysts' research to clients, making a stock rise
or fall. "You needed to be apprised of what he was thinking to gauge the direction the stock was likely to take,"
Orlando said.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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