The Wall Street Transcript Publishes Special Semiconductor Sector Issue
NEW YORK, Aug. 3 /PRNewswire/ -- The Wall Street Transcript has just made available a special 132-page edition produced for the July 28-29 BancBoston Robertson Stephens 13th Annual Semiconductor Conference. Featuring interviews with eight leading analysts and CEOs or top management from 31 companies, this special issue offers an excellent current review for analysts, investors, and companies. Highlights include:
Two leading Investment Bankers discuss corporate finance and capital issues in the semiconductor sector:
1) Technology Banking -- Brian Bean is Head of Technology Banking. He discusses the flood of technology IPOs being passed in front of institutional investors, forecasts a 50% decrease in the number of public semiconductor capital equipment companies as a result of future M&A activity and explains his positive outlook for the second half of 1999. Bean states, "In the semiconductor capital equipment space, there have been a few deals sporadically over the last two to three years. On the other hand, that area is overripe for consolidation. At some point we'll see a mass consolidation. In the overall technology space, there are probably only a few dozen great consolidators and fewer in the semiconductor arena; Intel (Nasdaq: INTC), certainly and Applied Materials (Nasdaq: AMAT), has potential. Sometimes the consolidators are themselves eaten. Level One (Nasdaq: LEVL) acquired Acclaim. They acquired Jato, and then they were swallowed by Intel. Dave Rickey, at Applied MicroCircuits (Nasdaq: AMCC), acquired Cimaron in a very successful acquisition, giving him the next piece of the jigsaw puzzle. I would expect to see additional acquisitions involving companies in the spaces that have the most to lose if they don't take advantage of an opportunity to accrete technology, thereby placing themselves in a position of broader market power because they have more of the total solution."
2) Investment Banking & Technology -- Managing Director Chris McCabe analyzes the potential for additional M&A activity in the sector, "One of the things that may drive merger and acquisition activity in the industry is the tremendous valuation gap between the large cap companies that can offer broader suites of products and worldwide support and service and the smaller cap companies. You see higher valuations for Applied Materials, Teradyne (NYSE: TER), Novellus (Nasdaq: NVLS) and Lam (Nasdaq: LRCX), as investors are moving into those stocks because they offer a broader product line and worldwide service. And then you see a large number of small cap companies that really haven't seen a lot of movement in their stocks. So while the semiconductor capital equipment index is up dramatically since October, the bulk of that capital appreciation has gone to a smaller number of the largest companies. Because the business is starting to pick up, we may not see the level of activity we might have otherwise seen because the rising tides will lift all boats in this sector."
Five leading analysts discuss their areas of expertise and offer stock recommendations:
1) Computer Hardware & Semiconductors -- Senior Technology Analyst Daniel Niles examines the different outlook for PC vs. non-PC related semiconductor firms, DRAM oversupply and new business models in the sector. Niles states, "MIPS (Nasdaq: MIPS) is very interesting because of the intellectual property model that it has. It is helping to pave the way into a whole new area where you make money as a semiconductor company, not by building the chips, and not even necessarily by selling the chips, but by designing them, licensing, and collecting royalties. It is also a great play on the whole Windows CE market and embedded processor market -- in other words, embedding intelligence in a lot of different electronic devices."
Niles asserts, "Texas Instruments (NYSE: TXN) is a great play off of the whole wave towards digital signal processors. The more you need to manipulate data quickly, transfer it quickly, compress it, decompress it, or just move data around in a very fast manner, the more you're turning towards digital signal processors, and TI is the market leader in that. It has almost half the market, and that market share will probably continue to grow."
He states, "With LSI Logic (NYSE: LSI), you not only benefit from its exposure to telecommunications and data communications, you also have a really good play off the whole consumer electronics market. They have very good relationships with a lot of the big vendors that sell digital cameras, DVD players and set-top boxes. So there you're getting a play on some markets that are very big and very fast-growing as you go towards the second half of the year, when those consumer markets really should start to accelerate. Xilinx (Nasdaq: XLNX) is the leader in the whole programmable logic space with its new Virtex products. They are really helping companies get to market faster, so they're enabling time to market."
2) Semiconductor Equipment -- Managing Director Susan Billat investigates capacity concerns, the move to .18 microns, the difficulties small firms face trying to attract contracts from global companies and the sector's turnaround since October '98. Billat declares, "One of my favorites right now for front-end-wafer-processing is Applied Materials, a true industry leader. One of the hallmarks of Applied is taking market share during downturn. During downturns, the chip industry tends to evaluate its suppliers and make decisions for its next generation of tooling. When the upturn comes, engineers are so busy adding capacity, they are much less likely to change suppliers. So one of the key indicators to determine who the winners are is who gained market share during the last downturn, and Applied did that in spades. So did Novellus, and they're another favorite of mine -- as well as Lam Research, which is really a comeback story, a company that had a very difficult time."
3) Communications & Analog -- Senior Analyst Arun Veerappan talks about stock performance, the stability of the analog segment and firms benefiting from the need for increased bandwidth. Veerappan says, "Hi/fn (Nasdaq: HIFN) is really a play that's squarely on the ability to be able to communicate in the Internet age in a secure manner where all the information you transmit and receive is compressed and encrypted. These guys have technology that represents a de facto standard in the compression arena, and they're bolting onto that encryption capability, so that's one to watch. And I think their prospects are quite exciting."
4) Intelligent Measurement Systems -- Vice President Steven DeLuca details recent buying trends in the sector and machine-vision vs. laser-based inspection markets. DeLuca explains, "The companies that I follow that come into contact with the semiconductor industry are mostly machine vision or what we would call intelligent measurement system companies. Machine vision is just basically a computer that can see. It takes an image from a camera and processes that image, looking for faults that are within certain ranges to improve yields of semiconductors. Intelligent measurement systems would be using anything other than a computer and a camera; in most cases these would be laser-related measurement systems."
5) Digital Media Infrastructure -- Analyst Arnab Chanda focuses on different drivers for multimedia products and his efforts to sway investors from a PC focus to a more digital consumer theme. In the PC-related segment, Chanda highlights high performance graphics card manufacturer 3Dfx (Nasdaq: TDFX), "They have historically been very successful in their retail market. They are starting to get design wins in the consumer OEM market, and we think that they are among the better positioned of the graphics companies because they are focusing on the side of the market that is high-performance, where you can differentiate your product. They are not playing in the integrated lower end, where the price combination is going to be very, very bloody because Intel plays in it."
This issue also features:
Q&A Interviews (each averages 2,500+ words) with CEOs or top management from the following 31 companies, as they offer an in-depth view of their firm, the key trends they see in their markets; the opportunities they face and their key concerns, specific goals they are setting for their organization; and the outlook for investors:
Advanced Energy Industries, Inc
Applied Micro Circuits Corp.
ASM Lithography, Holdings
Atmel Corp.
C-Cube Microsystems, Inc.
Conexant Systems Inc.
Credence Systems Corp.
Coherent, Inc.
CyberOptics Corp.
Mentor Graphics Corp.
MIPS Technologies, Inc.
Micrel, Inc.
Microchip Technology
Microtune
National Instruments Corp.
National Semiconductor Corp.
NeoMagic Corp.
Power Integrations, Inc.
QLogic Corp.
Rambus, Inc.
SanDisk Corp.
Semitool, Inc.
Tegal
Teradyne, Inc.
Tripath Technology
Synopsys, Inc.
Summit Design, Inc.
Varian Semiconductor Equipment Associates, Inc.
Vitesse Semiconductor
For information on how to obtain a copy of this issue, see twst.com or call 212-952-7433. This special section is also included in the TECHNOLOGY Sector of TWST Online. For info, go to twst.com
The Wall Street Transcript is a premier weekly investment publication interviewing market professionals for serious investors for over 35 years. Now available online to web users at twst.com, TWST Online provides hundreds of free excerpts from our Interviews plus new sector-based online subscriptions.
Visit twst.com for TWST's free news page with recent recommendations from top analysts and money managers. The Wall Street Transcript does not endorse the views of any interviewee nor does it make stock recommendations.
|
