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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (32739)	6/11/2001 5:43:46 PM
From: Return to Sender	Respond to of 68586

Warnings Renew Pessimism for Chips Industry dailynews.yahoo.com By Daniel Sorid and Tim McLaughlin NEW YORK/BOSTON (Reuters) - A raft of warnings in the semiconductor arena on Monday dashed hopes for a quick turnaround for the sector, and analysts said they expect more disappointments, especially from makers of communications chips. ``The recovery is just not happening as fast as people had anticipated,'' said chip equipment analyst Tia-Min Pang of SG Cowen. ``As a result, there are some people getting impatient.'' While some segments of the chip industry, such as personal computers, may be getting a lift, analysts said chip companies with exposure to the communications sector may need to bring down guidance. Chip equipment companies DuPont Photomasks Inc. (NasdaqNM:DPMI - news) and Varian Semiconductor Equipment Inc. (NasdaqNM:VSEA - news) as well as communications chip maker Anadigics Inc. (NasdaqNM:ANAD - news) cut financial forecasts and announced job cuts on Monday. The news came only a few days after Intel Corp. (NasdaqNM:INTC - news), the world's biggest semiconductor maker, raised hopes that the industry had seen the worst of the high-tech downturn of the past year. ``People who thought the equipment sector had hit bottom were totally wrong,'' said Merrill Lynch analyst Brett Hodess. ``Orders are continuing to decline during the second quarter and they may likely decline right in through the third quarter.'' Investors have for months been speculating that business could not get worse for semiconductor companies, which occasionally gave those stocks a pop. But a triple threat -- weak demand, weak prices, and weak international markets -- continue to keep business in the pits, said Lehman Bros. analyst Dan Niles. ``Investors wanted to ignore all the bad news,'' he said. Niles said chip makers who serve any of the major markets -- personal computers, wireless communications, and data networking -- will need to cut back on earlier optimism that led some companies to predict a business boost in the second half of the year. In Paris, Douglas Lee, managing director for semiconductor research at Bank of America Securities, said global semiconductor sales could dip 25 percent or more in 2001 before bouncing back 10 percent next year as inventories are gradually pared down. For chip equipment makers, continued weakness for communications chips have stripped away a major chunk of business, SG Cowen's Pang said. Word from top chip maker Intel Corp. (INTC.O) that demand for personal computers may be stabilizing may bode well, but ``that alone is not going to drive orders,'' he said. Pang said companies with the ability to support new chip equipment technologies, such as using copper to connect the miniscule switches in microchips, may find some relief from an overall downturn. But companies whose businesses require sheer volume, such as Kulicke & Soffa Industries Inc. (NasdaqNM:KLIC - news), may struggle amid the downturn, Pang said. Boston-based Teradyne Inc. (NYSE:TER - news), the leading maker of semiconductor test equipment, is scrambling to cut costs and unload laggard product lines to avoid further disappointments for investors. Teradyne last month cut 400 more jobs, or 4 percent of its work force, amid slumping sales of its connection systems. After a booming business last year, demand for components found in Internet routers, computer servers, telecommunications switches and aerospace devices have slowed on reduced capital spending, Teradyne officials said on Monday. Last week, Teradyne said it agreed to sell its division that makes connectors and backplane assemblies for defense and aerospace customers to Amphenol Corp. (NYSE:APH - news). Terms were not disclosed, but the aerospace and defense business generated about $26 million in sales last year. Despite slipping margins, Teradyne is looking to break even in the quarter and has not lowered that expectation on bookings of $425 million to $450 million.