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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (1372)	7/3/2002 8:46:54 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Ian, I'm sure MS or some other brokerage house could whip up an explanation like the "unexpectedly high demand cannot be sustained going forward.....SELL!" BTW, notice how we are seeing many more "Avoid" and "Sell" signals from analysts after we fall nearly 80%? Where were these geniuses three years ago? IMHO again proving my hypothesis that the advice they give will slowly relegate them to irrelevant status among all investors. They are well on their way there...... Brian

To: Ian@SI who wrote (1372)	7/4/2002 8:40:22 AM
From: Proud_Infidel	Respond to of 25522

Ian, I post this only because it has an analyst who differs with the article you posted from the EETimes, and both companies(XLNX & ALTR) who disagree with the analyst's interpretation of events. Brian Is excess inventory plaguing Altera, Xilinx? By Crista Souza EBN (07/03/02 14:56 p.m. EST) With recovery in the communications market taking much longer than anyone anticipated, has the excess-inventory demon returned to haunt the two largest PLD suppliers? One analyst thinks so, but the two companies, while arguing that no such problem exists, were unable to shed any light on their supply and demand picture because they are muted by the so-called “quiet period” prior to disclosing quarterly results. According to reports issued last week by analyst Eric Chen of J.P. Morgan Securities Inc., San Francisco, both Altera Corp. and Xilinx Inc. may have accumulated a “moderate amount of excess inventories” in the just-ended second quarter. Chen said poor manufacturing yields on the newest FPGA products caused customers to over-order during May and June. This, combined with an anticipated further decline in demand at wireless and storage customers, will impede sales in the September quarter, Chen wrote. His subsequent downgrade of Altera and Xilinx sent the companies' stock prices tumbling a respective 6.5% and 7.8%. The problem Chen identified appeared to be localized at Xilinx, which has reportedly experienced low yields at sub-0.18-micron geometries that caused temporary supply shortfalls amid strong uptake for its Virtex-II parts. “Consequently, lead time for these new products stretched out and might have motivated some of Xilinx's customers to aggressively place orders, sometimes above their actual needs,” Chen wrote. Altera, he surmised, must be experiencing similar issues relative to its Stratix FPGA family, which is built on 0.13-micron technology. Though “far less serious” than the inventory overbuild that froze the red-hot communications market in early 2000, the excess will suppress revenue growth at Altera and Xilinx, according to Chen, who was not available last week to discuss his report. Both companies disagreed with Chen's interpretation of events. It is “not the case” that customers double-booked on fear that Xilinx would miss ship date commitments, said Maria Quillard, director of investor relations at the San Jose company. “Particularly for Virtex-II, we did see strong order growth beyond our expectation,” she said. “The issue for us was, wafers came in late in the quarter, and we were having to scramble to get finished product out to customers [before closing the quarter on June 30].” Quillard would not comment ahead of a scheduled July 18 earnings announcement on whether Xilinx was successful in shipping those parts, but said it is “not uncommon” to have the bulk of orders come in at the end of a quarter. Quillard added that “for us, inventory in the distribution channel is at an all-time low.” Altera, meanwhile, said its inventory, too, is lean, and the company has not experienced manufacturing setbacks that would negatively affect those levels. “Our ability to produce on schedule in the sub-0.18-micron era is evident if you look at Stratix,” said Scott Wiley, vice president of investor relations at the San Jose company. “We shipped the first device of that family [in June] not just on time but ahead of schedule.” However, Wiley said he could not address demand trends prior to Altera's scheduled earnings announcement on July 22. Executives at distributors Arrow Electronics Inc. and Avnet Inc. were not available to comment. Reflecting widespread concern that the communications end market is experiencing a second downturn, or “double dip,” Chen wrote that demand from wire- less infrastructure and storage customers is “likely to slow meaningfully entering the September quarter.” Chen reduced his calendar 2002 revenue estimates for Altera to $724 million from $763 million, and for Xilinx to $1.16 billion from $1.22 billion. Other chip suppliers have similar expectations. Anadigics Inc., Warren, N.J., last week said it anticipates a sequential decline in third-quarter wireless revenue, due to seasonal factors and weakness in the TDMA handset market.