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Technology Stocks : RF Micro Devices (RFMD) -- Ignore unavailable to you. Want to Upgrade?

To: im a survivor who wrote (4076)	2/7/2002 2:32:57 AM
From: A. Edwards	Read Replies (1) \| Respond to of 4849

Positive on Wireless Component Suppliers 6 February, 2002 Merrill Lynch Morning Notes: Semiconductors Wireless ICs: Wireless Component Update - Positive on Wireless Component Suppliers Due to Low Levels of OEM Inventory. - According to our estimates, wireless component inventory levels at both OEMs and distributors appear to have declined during 4Q01 and remain at 1999 levels. This is especially encouraging to us as the amount of cell phones sold in 1999 was 275 million, and for 2002 the Merrill Lynch forecast is 410 million. However, due to lower-than-expected Christmas sell-through during the December quarter, we believe there has been a slight inventory build at the wireless service providers, perhaps up to an additional two weeks. We believe this is evidenced by service providers such as Sprint PCS reporting lower-than-expected net additions during 4Q01 and the rash of discounts and free cell phone offers during the Christmas season. - Even with a slight potential inventory build at service providers, due to the low levels of handset inventory at wireless OEMs, we believe the slight inventory overhang should be corrected within 1-2 quarters. Our handset inventory analysis at Nokia, Motorola, Ericsson, contract manufacturers and handset distributors such as Brightpoint indicates aggregate wireless inventories declined during 4Q01 for the fifth straight quarter. Our wireless equipment team expects only 90 million handsets to be shipped during 1Q02, a sequential decrease of 15%-20% from the 105-110 million units shipped during 4Q01. We look for handset demand to increase during 2H02 as 2.5G applications combined with color screens and other new features drive replacement rates for handsets. What does it all mean? Still positive on wireless - attractive valuations - Despite a seasonally weak 1Q02, we remain positive on wireless component stocks such as RF Micro Devices (RFMD; D-2-1-9; $16.98) Volatility Risk: High; and TriQuint (TQNT; C-2-1-9; $9.50) Volatility Risk: Above Average; since OEM inventories remain low which means wireless component companies should experience a substantial and immediate increase in order rates as demand picks up during 2H02. In addition, RFMD and TQNT are among the most reasonably valued semiconductor stocks based on C03 price/earnings ratios. We are reiterating our intermediate-term Buy and long-term Strong Buy ratings on RFMD and TQNT as we believe the risk/reward ratio for both stocks is very favorable for investors with a twelve-month time horizon. We recommend RFMD as our favorite wireless stock and TQNT as a value stock with less volatility and risk.