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Technology Stocks : Atmel - the trend is about to change -- Ignore unavailable to you. Want to Upgrade?

To: cc rogers who wrote (9976)	7/2/1999 10:10:00 PM
From: Henry Eichorszt	Respond to of 13565

From SmartMoney- Atmel shares touched a new 52-week high of 28 1/8 during trading Friday as investors got wind of an upgrade by SoundView Technology Group analyst Sudeep Balain on Thursday. The analyst raised his recommendation on the chipmaker's stock to Strong Buy from Buy. A plus for Atmel: it owns its manufacturing plants, typically called fabs. "As the industry picks up, this company will continue to improve operating margins as their fabs fill out," he says. Operating margins in the first quarter were 7.4%, and Balain sees them jumping to almost 18% by the fourth quarter of next year. Atmel is also well-positioned because it makes chips for communications, a hot area right now. With profit margins in chipmaking being squeezed by low-end chips used in cheap PCs, the industry is moving to higher-value markets. Atmel specializes in 16-megabit Flash memory chips, which are used in many hand-held devices. For example, these chips allow your cellular phone to retain phone numbers after the power is turned off. It's a good time to be making these components. "The handset market is basically on a tear," Balain says. What's more, Atmel's bookings are strong, which will lead to better earnings results in the second half of the year, he says. "As we approach the equilibrium point in the supply and demand curve for semiconductors, which we believe will occur during the second half of this year, we look for Atmel to begin to see an acceleration in both top- and bottom-line growth, given its diverse product lines and the operating margin expansion that should be gained from higher fab utilization, better expense control and improving gross margins," Balain said in a recent report. MR