08:45 AM ET******Briefing.com
SEMICONDUCTOR SECTOR:Is the semiconductor sector beginning to revive again? It certainly seems that way after Applied Materials (AMAT 63 1/8) reported better-than-expected numbers last night. However, with DRAM prices again wilting and falling below the $6 mark in the spot market (they averaged over $9 just three months ago), are semiconductor chip makers really going to be aggressively spending to build capacity with semiconductor equipment suppliers? That is the major question that will be hanging over this sector for some time. While Applied Materials has made significant strides in getting its operating numbers back up after experiencing a rough patch the past couple of years, much of the recent gains have been accomplished by the restructuring the company put in place last year. Still, in the latest report, orders did increase, but the question remains whether this uptick in demand will be sustainable. It is too early to say whether the upturn is for real, but investors are likely to clamor for the stock this morning as the company also said last night that it expects fiscal Q3 earnings of between $0.50 and $0.54 a share on revenues of $1.3 bln to $1.5 bln. This is significantly higher than what Wall Street was expecting and thus, it is a positive for the stock this morning. Yet, the semiconductor sector is very dynamic and volatile, and we've been through various so-called rebounds previously that have failed to materialize. If Asia and Europe are able to come back as major centers for chip equipment demand, possibly the much-awaited rebound is here to stay. Until then, however, questions prevail whether the sector has actually turned the corner again. At least for today, these worries are likely to be put aside.
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