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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: JoeinIowa who wrote (22182)	11/17/2000 8:05:26 AM
From: JoeinIowa	Respond to of 29382

Printable version E-mail this! Reuters, 11/16/2000 15:58 Communications chip makers dive after downgrade LOS ANGELES, Nov 16 (Reuters) - Shares of companies that make semiconductors for the high-speed communications industry fell on Thursday following a downgrade by a key Wall Street analyst on concerns about inventory buildup. Merrill Lynch Analyst Joe Osha cut his intermediate-term ratings on five communications chip makers to "accumulate" from "buy." He also reduced his 12- to 18-month price targets on the five and on two others. The downgrade affected Applied Micro Circuits Corp. (NASDAQ:AMCC), Broadcom Corp. (NASDAQ:BRCM), PMC-Sierra Inc. (NASDAQ:PMCS), TranSwitch Corp. (NASDAQ:TXCC) and Vitesse Semiconductor Corp. (NASDAQ:VTSS). Osha lowered his price targets for Conexant Systems Inc. (NASDAQ:CNXT) and EXAR Corp. (NASDAQ:EXAR). Shares in the sector were sharply lower in Nasdaq trade. Broadcom was hit hard, dropping $13-1/16, or nearly 8 percent, to $156-11/16. The stock has fallen 28 percent in the past two weeks and is down from a 12-month high of $274-3/4. PMC-Sierra, one of 10 most active Nasdaq stocks, fell $11-15/16, or 9 percent, to $119-1/4 on volume of 8.9 million shares, well above its daily average volume of 7 million shares. The shares are down from a 12-month high of $255-5/8. Applied Micro shares dipped $7-3/16, or 10 percent, to 63-3/4, down from a 12-month high of $109-12/16. The industry saw a downturn a week ago after key client Cisco Systems Inc. (NASDAQ:CSCO) posted strong quarterly growth but reported a 59 percent buildup in inventory levels. That hinted at a slowdown in demand for communications chips and prompted investors to punish chip makers. "We are downgrading our intermediate-term buy-rated (communication chip) stocks to 'accumulate' based on inventory concerns and belief that there is no near-term catalyst for their group," Osha wrote in a report. In a conference call, Merrill Lynch told fund managers that chip inventories as a percentage of sales among major buyers had risen to 69 percent from 47 percent in the past five quarters. The chips are key to high-speed communications used to satisfy strong demand for fast-speed Internet and other data transfer. Merrill Lynch emphasized that the long-term view for the industry was good but that a slowdown in growth would be an issue beginning in the March quarter. Copyright 2000, Reuters News Service