Message 12786302
To:
From: VFD
Saturday, Feb 5 2000 11:49AM ET
Reply # of 3101
biz.yahoo.com
Friday February 4, 4:08 pm Eastern Time
Company Press Release
SOURCE: Banc of America Securities
Growth in Communications Industry to Lead Upturn in Semiconductor Arena
Competition Among Network Providers Will Keep Moving From Hardware-Centric
To Software-Focused, Says Banc of America Securities Analyst
SAN FRANCISCO, Feb. 4 /PRNewswire/ -- The following is being issued by Banc of
America Securities, a member of the National Association of Securities Dealers, CRD
number 26091:
As competition among major network providers continues to shift from a
hardware-centric focus to differentiation through software features, the growth of the
communications industry will continue to lead the upturn in the semiconductor industry,
according to Banc of America Securities' two senior semiconductor analysts, Rick
Whittington and Alex Gauna.
(Photo: newscom.com )
Gauna and Whittington made their comments to investors yesterday at the 17th Annual
Banc of America Securities Technology Conference, which began Tuesday, February 1
and runs through today at the Ritz Carlton in San Francisco. This year's Tech Week
featured 195 presentations from public and private companies representing a broad
spectrum of investment opportunities in communications services, computer and
peripherals, distribution, networking, semiconductor, software and Internet industries.
''Given the pure communications focus of the broadband semiconductor companies on
our coverage universe, and the vast work remaining to be done in enriching and
extending the power of the Internet, we believe magnificent 1999 results can readily be
surpassed in 2000,' said Gauna.
Gauna told the audience that communications exposure will continue to be a strong
investment vehicle for semiconductor investors in 2000. Specifically, Gauna thinks that
the first half of 2000 will bring increasing focus on two areas within the broadband
semiconductor universe -- access and mobility. As the convergence of voice, data and
video takes center stage, Gauna articulated several trends to watch within these two
areas, highlighting products associated with network access including DSL, cable
modems, digital set-top boxes, T1/E1, T3/E3, ATM, and other commonly employed
technologies employed in the home and at work alike.
Products and services within the mobility area to which investors should pay attention
include concept Web pads, Internet-enabled PDAs, notebook PCs and Wireless
Internet handsets, according to Gauna.
In addition to mobility, speed has become a critical factor in this new paradigm,
according to Gauna. ''Massive deployments of high-speed SONET and DWDM
(dense wave division multiplexing) networking equipment across the optical transport
infrastructure is creating massive broadband voice, data and video delivering
capabilities,' said Gauna.
Gauna highlighted four specific leaders defining the broadband semiconductor market:
EXECUTION: On the residential side of the market, he believes there is no
better-positioned company than Broadcom (Nasdaq: BRCM, $311.25, Strong Buy)*
as we enter 2000. Gauna believes that Broadcom's premium is warranted given the
instrumental role the company is playing in the evolution of next generation Internet
communications.
FULL SYSTEMS KNOWLEDGE: PMC Sierra (Nasdaq: PMCS, $246.00, Strong
Buy)*, a company introducing complete chip set solutions as opposed to individual ICs,
also provides investors with a significant opportunity, according to Gauna.
CLEAR TECHNOLOGY ROADMAP: As the fastest growing semiconductor supplier
to optical networking companies, investors should continue to take notice of Applied
Micro Circuits Corp. (Nasdaq: AMCC, $186.25, Strong Buy)*
ALL OF THE ABOVE: As the largest purely communications-focused broadband
semiconductor company, Conexant (Nasdaq: CNXT, $94.38, Strong Buy)* is
increasingly demonstrating execution, full systems knowledge, and a brilliant technology
roadmap across a compelling portfolio of wireless, broadband access, telecom and
optical transport product lines.
Finally, in his remarks, Gauna compared the growth of hardware companies to that of
Internet software companies, noting that the average growth rates are comparable.
Furthermore, the broadband semiconductor companies in the Banc of America
Securities universe are actually more profitable than those within the firm's Internet
software universe; yet, the market continues to favor software companies as more
attractive investments. The relative valuations of these software companies, with an
expected 2001 price-to-earnings multiple of 308x, versus those of the broadband
semiconductor universe, with an expected 2001 P/E multiple of 134x, suggest a
misunderstanding of the value proposition, Gauna says.
Rick Whittington presented some macro themes to investors following Gauna's
broadband-specific remarks. ''The message is loud and clear: this is THE best
environment any of the semiconductor companies have ever seen,' said Whittington.
''We are impressed with the breadth of end markets, regions and products experiencing
sharp growth. January was universally better than had been expected and February is
already off to a fast start,' said Whittington.
Whittington's forecasts 35% growth in 2000 over 1999 and 40% for 2001, bringing the
industry to the magic $300 billion mark by 2001, he predicts. Furthermore, Whittington
projects additional 40% sequential growth years in 2002 and 2003, resulting in nearly
$600 billion in annual chip sales three years from now, this off a base of $160 billion in
1999.
''We strongly believe that semiconductor stocks are still under-appreciated and will
continue to materially outpace consensus estimates,' said Whittington. ''These stocks in
general remain outstanding investment values,' he noted. He added that analog and
communications stocks are particularly attractive, with the market cap of the analog
market totaling $220 billion and the pure-play communications IC market-cap at $90
billion versus the $750 billion market cap of the classic digital semiconductor universe.
Banc of America Securities LLC (BAS), a subsidiary of Bank of America Corporation,
is a full-service investment bank and brokerage firm. With principal offices in San
Francisco, New York City and Charlotte, BAS employs more than 4,000 associates in
offices around the country, and with affiliates, offers capabilities worldwide.
Bank of America Corporation, with $633 billion in total assets, is the holding company
for the largest bank in the United States, with operations in 21 states and the District of
Columbia.
Banc of America Securities LLC currently maintains a market in AMCC, BRCM,
CNXT, and PMCS. Banc of America Securities LLC was co-manager of a public
offering for AMCC in the last three years.
SOURCE: Banc of America Securities |
