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Technology Stocks : KLA-Tencor Corporation (KLAC) -- Ignore unavailable to you. Want to Upgrade?

To: Artslaw who wrote (1628)	1/15/2002 7:31:58 PM
From: SemiBull	Respond to of 1779

Chip equipment makers tumble on Intel spending plans By Daniel Sorid NEW YORK, Jan 15 (Reuters) - Makers of semiconductor equipment stumbled in after-hours trade after No. 1 chip maker Intel Corp. (NasdaqNM:INTC - news). said it planned to cut its capital spending budget 25 percent in 2002, below many analysts' expectations. Shares of Applied Materials Inc. (NasdaqNM:AMAT - news), the largest maker of equipment used to make microchips, dropped 6.4 percent in after-hours trading to $42.68 from $45.61 at the closing bell. Other decliners included KLA-Tencor Corp. (NasdaqNM:KLAC - news), which fell to $51.90 from $55.31, and Novellus Systems Inc. (NasdaqNM:NVLS - news), which fell to $39.70 from $42.31. Intel, whose capital spending accounts for about 20 percent of the entire industry's budget, reported capital spending in 2001 of $7.3 billion, money that was used to upgrade its factories to the latest chip-making technologies. In its report on fourth quarter earnings, Intel on Tuesday said it would spend $5.5 billion on capital spending in 2002, a 25 percent drop. ``We knew they were coming down, but that's really sharp,'' said Banc of America Securities analyst Mark FitzGerald. FitzGerald had forecast Intel would cut its spending to $6.5 billion. Chip makers suffered their worst-ever year in 2001 as spending on computers and other electronics lagged. In response, the industry spent about 35 percent less on capital equipment than during the boom year of 2000. Intel, however, went against the grain and actually raised its capital spending in 2001, to $7.3 billion from $6.7 billion in 2000. The increase came even as Intel's revenues dropped 21 percent in 2001. Wall Street expected a drop in Intel's capital spending this year, but not as severe a drop as Intel made evident on Tuesday. The consensus estimate was in the low-to-mid $6 billion range, said Merrill Lynch analyst Brett Hodess. The drop in chip equipment makers' stock prices comes after a big run-up since September. The Philadelphia Stock Exchange semiconductor index (^SOXX - news), a measure of both chip makers and chip equipment makers, is up about 60 percent since the end of September, when stocks collapsed following the September 11 attacks. Goldman Sachs analyst James Covello said investors had been buying chip equipment stocks on hopes that a recovery in the semiconductor sector would come sooner rather than later. Intel's cut in spending will put a damper on the optimism of some investors. ``This may be what they need to sort of reset the expectations.''