Chips down; AMD slips after UMC deal
Some hardware stocks find ways to 52-week highs
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 4:19 PM ET Feb. 1, 2002
NEW YORK (CBS.MW) - Chip stocks declined while PC stocks were little changed Friday.
The Goldman Sachs Hardware Index ($GHA: news, chart, profile) fell 1.5 percent while the Philadelphia Semiconductor Index ($SOX: news, chart, profile) lost 1.1 percent.
Late Thursday, AMD and United Microelectronics formed a joint venture to build and run a 300mm fabrication facility in Singapore. The plant should be online in 2005. UMC, the world's second largest chip foundry, also will build chips for AMD supplementing AMD's capacity in Dresden. See full story.
AMD's (AMD: news, chart, profile) stock fell 25 cents to $15.80 while UMC's (UMC: news, chart, profile) U.S. shares fell 50 cents to $8.32.
JP Morgan Securities said it expects the alliance to be "incrementally positive to AMD, as it reduces the execution risks and enables AMD to benefit from the 300mm technology."
Analyst Eric Chen wrote he doesn't expect the pact will "significantly impact AMD shares because the current driver of AMD shares is its market share position in 2002."
However, Shekhar Pramanick of Prudential said certain chip equipment firms could see some near-term benefit from this deal, particularly those that specialize in front-end transistor manufacturing and copper interconnects. He cited primary beneficiaries as Applied Materials (AMAT: news, chart, profile), KLA-Tencor (KLAC: news, chart, profile), Novellus (NVLS: news, chart, profile), and Rudolph Technologies (RTEC: news, chart, profile).
Some makers of communication chips marked notable gains early on Friday before closing in negative territory. O2Micro (OIIM: news, chart, profile) ended down 16 cents to $24.02, off of an intraday 52-week high. Oak Technology (OAKT: news, chart, profile) also pulled back after hitting a one-year high.
Cymer (CYMI: news, chart, profile), which makes lasers used to make semiconductors, also failed to hold on to a 16-month high as shares settled back to reflect gains of 49 cents to $37.22.
On the hardware side, StorageTek (STK: news, chart, profile) failed to hold on to afternoon gains, so the stock failed to set a new 30-month high. Shares ended down 3 cents to $24.44. At the beginning of 2001 shares traded for $9.50 and as recently as October shares could be bought for $15.
Two other storage companies successfully established new high water marks. Overland Data (OVRL: news, chart, profile) rose 90 cents to $16.71, a one-year high, and OnTrack Data (ONDI: news, chart, profile) rose 56 cents to $11.49, topping a one-year high set yesterday.
PC stocks were mixed and not far from the unchanged line in either direction.
Hewlett-Packard (HWP: news, chart, profile) fell 11 cent to $22 while Compaq (CPQ: news, chart, profile) lost 25 cents to $12.10 one day after the European Union's antitrust body cleared the merger of the two companies.
IBM (IBM: news, chart, profile) rose 11 cents to $108. Apple (AAPL: news, chart, profile) fell 31 cents to $24.41. Dell (DELL: news, chart, profile) slipped 69 cents to $26.80.
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