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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (137453)	6/14/2001 10:51:40 PM
From: Eric K.	Read Replies (1) \| Respond to of 186894

Anyone know what Niles is doing with this junk? biz.yahoo.com -Eric

To: Paul Engel who wrote (137453)	6/15/2001 1:33:11 PM
From: ColtonGang	Read Replies (1) \| Respond to of 186894

Chip industry prospects continue to dwindle By Reuters June 15, 2001, 10:00 a.m. PT LONDON--Three more semiconductor companies showed on Friday how steep the fall in fortunes is for the chip industry, as they further cut sales forecasts and added that a recovery may not take place before 2002. Warnings from Netherlands-based Philips Electronics, Taiwan's United Microelectronics and U.S.-based General Semiconductor followed hard on the heels of previous warnings from France's STMicroelectronics and U.S.-based Texas Instruments. All of these companies now expect second-quarter sales to drop between 17 percent and 35 percent from the first quarter. This compares with forecasts made by many of the companies only a few months ago (which scaled back earlier expectations) that sales would be stable quarter-to-quarter. Slower consumer demand for technology products and reluctance from electronics manufacturers to take up excess inventories has now forced them to issue another set of warnings. The warnings made clear that U.S.-based Intel's modestly optimistic midseason update, which enthused global technology markets last Friday, was a one-off. The Dow Jones European technology index fell 4 percent to 440 points on Friday, losing more than 100 points in just a week as Finnish cell phone maker Nokia spooked the market Tuesday with a forecast of lower sales and profits. The world's largest mobile phone producer also said global handset sales would be below last year's levels, the first sales drop in the mobile industry's history, and a clear indication that sales of components such as chips were set to decline. Fog clears, but no sunshine So chipmakers have finally shared their views for the rest of the year, after having hidden for months behind murky market conditions and "low visibility," the jargony phrase of choice recently. Philips warned the third quarter is going to be even worse, and that the fourth quarter will not show a marked recovery. "We're not forecasting a recovery (in the fourth quarter) right now," Chief Financial Officer Jan Hommen said in a conference call, adding that the fourth-quarter business climate would not be any different from the second. United Micro Chief Executive Peter Chang said he did not rule out the possibility that business conditions would deteriorate from those in the second quarter. The two joined Knut Hinrichs of German specialist chip maker Elmos Semiconductor, who was among the very first to face the music when he told Reuters earlier this week that any recovery would not come before the middle of 2002. Both buyers and sellers of stocks agree that valuations of semiconductor stocks are still stretched to their limits despite the downturn. One fund manager thought chip shares should halve to be "decently priced," while Robertson Stephens analyst Gary Kelly said shares of STMicroelectronics and Infineon had fair values of around 25 euros ($22), while both were trading at around 36 euros ($31) Friday. Scarcity of European semiconductor stocks could still warrant a higher price, analysts agreed. On the other hand, European chipmakers are especially exposed to the depressed market for cell phones. STMicroelectronics generates 13 percent of sales from Nokia alone. Slowing demand from key customers, who cannot push their end products--such as cell phones--to consumers reluctant to spend beyond their means in uncertain economic times, has caused a sharp fall in capacity utilization. Philips said its chip factory utilization rates would be at around 45 percent of capacity at the end of the second quarter, while its breakeven is around 60 percent. Foundry makers in Asia, such as United Micro, where utilization had been reported at a weak 70 percent as recently as a few months ago, are now also in the disastrous mid-40 percent range. Meanwhile STMicroelectronics claimed capacity utilization is between 60 percent and 85 percent--depending on the type of machinery--but it also told analysts on Thursday that its inventories would be higher at the end of the second quarter, according to analyst Steven Vrolijk at ING Barings. "The (only) good news is that Philips and STM have spent most of their capex for the year, meaning there won't be more capacity coming on stream in the second half," he said.