It looks like Sound View is fly in the ointment today
Chip Equip Stks Drag Down Tech Sector
NEW YORK (Dow Jones)--Technology stocks were dragged down Thursday by investor concerns that the chip equipment sector would be hurt by a continued depression of memory chip prices.
The concerns were sparked by a research note from Soundview Technology analyst Michael O'Brien who said the continued price decline of dynamic random-access memory, or DRAM, chips has made him more cautious about capital equipment companies including Teradyne Inc. (TER). He removed Teradyne from his focus list. Teradyne shares recently were down 11%.
The technology-laden Nasdaq Composite Index was down 44, or 1.7%, after dropping 2% Wednesday. Meanwhile the the Dow Jones Industrial Average was up 8 at 10853, after rising 13.74 to a second straight record close Wednesday.
The Dow Jones Index of computer stocks was off 1,4% and the software index was off 0.7%. Meanwhile the semiconductor index was off 2.3%. The broader Dow Jones Equity Market Index was off 0.6%.
SoundView's O'Brien questions expectations that spending on memory chips will be very aggressive toward the end of 1999 into 2000.
Tom Newman, Teradyne's spokesman, told Dow Jones that memory chips accounted for only about 18% of the company's total revenues in 1998.
Memory chip prices have been depressed for several years, and other market sources said they did not know of any new information that came out Thursday about memory chip pricing other than the SoundView note. The largest U.S. maker of DRAM chips, Micron Technology Inc. (MU) was off 2.9% at 37 1/4. The largest chip maker, Intel Corp. (INTC), was off 1.8% at 60 1/16.
Meanwhile shares of other chip equipment makers such as Applied Materials Inc. (AMAT), Kulicke & Soffa Industries (KLIC) and Novellus Systems Inc. (NVLS) fell sharply in comparison to the chipmakers.
Merrill Lynch Global Securities analyst Mark FitzGerald said Applied Materials' stock is the victim of investors concerned about chip-equipment makers' exposure to the DRAM business.
Some investors believe chip-equipment stocks are at the bottom of the food chain, FitzGerald said. "If their customers start having problems, it's only a matter of time before they do," he added.
Some industry observers pointed out that the chip-equipment sector seems to be on a comeback. They note that the chip equipment book-to-bill ratio was a strong 1.30 for March.
Appplied Materials recently traded at 51 3/4, down 2 7/16, o 4.4%, on volume of almost 27.9 million shares versus average daily volume of 9.4 million shares. The company was also among the most active Thursday in options trading.
Kulicke & Soffa Industries recently traded at 23 3/4, down 4 3/8, or 15.6%, on volume of 881,800 shares versus average daily volume of more than 568,000. Earlier Thursday, the company reported a second-quarter loss that exceeded analysts' expectations.
Novellus Systems recently traded at 49 3/8, down 2 1/8, or 4.1%, on volume of 2.1 million shares versus average daily volume of 1.8 million.
Teradyne recently traded at 49 5/16, down 4 11/16, or 8.7%, on volume of 3.5 million versus average daily volume of 1.2 million.
- Heesun Wee; 201-938-5392 |
