Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: nbfm who wrote (5689)	12/21/2000 11:07:37 AM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 196822

WSJE: Heard In Europe: This News Is Uncomfortable By JESSE EISINGER Scenes from the slowdown: One of the signs of a bear market, it's been noted frequently, is that good news barely produces a ripple in a stock and bad news scares the pants off investors. The reaction is the dark mirror of the behavior earlier this year when obviously negative developments couldn't dent a stock's momentum. Investors took a two-by-four to American electronics-parts maker Sawtek on Monday after Qualcomm announced it's developing a chip that eliminates the need for Sawtek's SAW filters, which are used in wireless phones. Analysts rushed to the company's defense, and the stock finished off 17% after having been down much further. Maybe this type of new chip won't affect Sawtek's business tomorrow or next month or next year - Sawtek issued a news release to that effect - but it underscores the relatively low-tech quality of such component makers. Companies such as Qualcomm, Analog Devices and Agilent are all starting to develop chips that potentially will eliminate these so-called passive components. That cannot bode well for a company such as Epcos, which makes a SAW filter similar to Sawtek's, and which was the subject of a skeptical Heard in Europe column on Monday. The German company got hit by the Qualcomm news Monday, but recovered Tuesday to finish up 1.9% to 96.25 euros. Epcos says Qualcomm's proposed chip won't replace any of the Epcos products. The threat of elimination by chip makers that are higher up on the food chain is "a very old story," says Epcos spokesman Heinz Kahlert. Miniaturization is a constant in the semiconductor business, he says, and Epcos can also make improved products that offer advances. We shall see. Perhaps the markets overreacted. But why stick with companies that are that low on the food chain? You can't fault investors for a bout of nerves when news of potential increased competition comes on the heels of worries about a slowdown. --- Then again, sometimes the market doesn't react to bad news. VeriSign, the U.S. electronic-security company, said Tuesday that it had teamed up with iPlanet - an alliance between Sun Microsystems and Netscape, which is a unit of America Online - and Gemplus, a smart-card maker, to provide a "complete e-commerce solution for Identrus participants." Once you wade through the tech jargon and figure out what Identrus is, you realize this isn't particularly good news for Ireland's Baltimore Technologies, an Internet-security company. Identrus is the world-wide consortium of banks forming a standard for financial-services security software for the Internet. In the minds of many U.K. investors, Baltimore is closely linked with Identrus. But Identrus banks do have a choice about which Internet-security company they want to go with - they don't have to choose Baltimore. VeriSign's new alliance announced that it has snagged its first Identrus customer, Canadian Imperial Bank of Commerce. This isn't a huge surprise since Baltimore isn't as strong in North America as it is in Europe. But many investors hadn't regarded VeriSign as much of competitor, focusing more on a company like the U.S.'s Entrust. "Will it be a little shock to the market? I think so, particularly U.K. investors," says Brian Skiba, a software analyst for Lehman Brothers, the company's banker, who is nonetheless bullish on Baltimore. It closed Tuesday down 4.6% at 365 pence (6.01 euros). The threat will sink in. --- In the denial department: Tuesday, Goldman Sachs downgraded ST Microelectronics, the French semiconductor company, citing a "slowdown in the mobile-phone industry" that will hurt suppliers to handset makers. The analysts reduced their earnings estimates for next year by 8% to $2.05. The analysts write, "U.S. companies have given several profit warnings in this area, but Europeans have so far sounded more confident." Instead of trusting that companies know best, the Goldman analysts actually think for themselves: "We fear this means another shoe will drop." If ST Micro is going to be hurt by this, so will all the others, including companies such as Infineon and our friend Epcos. And what about the handset makers, such as Ericsson - or even Nokia, which spurred a rally several weeks ago with a bullish analysts meeting? Speaking of German semiconductor companies, J.P. Morgan cut earnings estimates on Siemens this week by 7% for the year ending Sept. 30, 2001, and 6% for fiscal 2002. This was in part because of a change in the German company's accounting to U.S. generally accepted accounting principles, but also because the firm has reduced estimates for Infineon. These kinds of analyst notes raise a big question. Surely, the coming slowdown in the U.S. is going to affect European companies. So why aren't they issuing profit warnings as much as American companies? Maybe the economy and demand in Europe aren't slowing nearly as fast as in the U.S. Or the companies will start issuing warnings early next year. Despite the U.S. Federal Reserve's movement toward easing, many investors are still betting on the latter.