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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: A. Edwards who wrote (2856)	10/4/1999 11:48:00 PM
From: A. Edwards	Read Replies (1) \| Respond to of 4710

Semiconductors Earnings Preview - September Quarter Merrill Lynch & Co. 4 October 1999 Joseph Osha Eric Rothdeutsch Mark Lipacis Chris Danely Investment Highlights: · We expect the September quarter earnings season for the semiconductor industry to be upbeat. The turnaround in demand and pricing that began in the fall of 1998 continues, which should make it easier for the industry to hit our industry growth expectations of 16% for 1999. · The strong demand for communications equipment continues to be the most exciting growth driver for the semiconductor industry. We expect the communications-oriented companies under our coverage to see average YoY revenue growth of 77% and average EPS growth of 110% for the September quarter, well in excess of the overall industry. · Two weeks after the Taiwan earthquake, Tai Power has restored full power to the island's fabrication facilities, while rationing it to most of the rest of the island. We believe most of the equipment at the major fabs had been recalibrated by the end of last week, and we expect most fabs to be running at full wafer starts shortly. Fabless companies in the wireline communications industry could see some downside in the December quarter as a result of the downtime in Taiwan - we expect comments from companies during the upcoming earnings season to be cautious. We still believe the fundamentals in the communications sector are compelling, and would use any pullback in the sector as a buying opportunity. · We also believe that supply chain disruption in the PC industry will cause Intel to be more cautious in its assessment of the December quarter than it would otherwise have been. · Companies for which we have either intermediate or long term buy recommendations include Atmel, Broadcom, Conexant, Intel, PMC Sierra, Texas Instruments, Vitesse Semiconductor and Xilinx.