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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (7354)	12/2/2002 1:43:17 PM
From: The Ox	Read Replies (1) \| Respond to of 95487

I am surprised that you left out the two keys I look to determine: 1. the expected growth rate of the company's market; and 2. the company's competitive position. I left out a lot of important factors since I was only demonstrating my point that there are numerous data points which make up the whole. Too often a small and incomplete subset gets used for valuations tossed out by our friendly analysts. I have been guilty of this myself many times in the past and I've been trying to reduce these types of "mistakes", especially when I post on SI. Here's more on Merrill's handset estimate increases for 2003: Merrill Boosts Wireless Handset Sales Forecasts for 2003 Monday December 2, 10:50 am ET By Nic Fildes Dow Jones Newswires LONDON -- Merrill Lynch & Co. (MER) marked its expectations for mobile handset sales significantly higher Monday, in the latest sign of optimism toward the European wireless sector. The U.S. investment bank said it now expects global handset shipments in 2003 to total 474 million units, up from its previous estimate of 410 million. Merrill raised its forecast for 2004 sales to 501 million units from 420 million. Based on its new forecasts, Merrill upgraded its ratings on Finland's Nokia Corp. and the United Kingdom's ARM Holdings PLC to "buy" from " neutral." Nokia is the market leader in handsets, while ARM designs many of the microchips used in the wireless communications industry. The forecasts, published as Nokia's year-end strategy conference gets under way later Monday in Dallas, Texas, provided further fuel for arguments that the handset market is set for a bounce after two years of stagnation. Some observers expect more upgrades to forecasts in the coming week. Merrill increased its earnings per share forecasts for Nokia by 41% in 2003 and 45% in 2004. It upped its forecasts for ARM by 28% in 2003. In midafternoon trading in Helsinki, Nokia shares were up 94 European cents, or 4.9%, at 20.34 euros ($20.23) -- the first time since April that Nokia has traded above 20 euros a share. In London, ARM shares were changing hands at 76.25 pence ($1.19 or 1.19 euros), up 8.75 pence, or 13%. The positive sentiment was bolstered by comments from Dresdner Kleinwort Wasserstein, which said investors should be prepared for upbeat forecasts from Nokia itself -- to the tune of 15% growth next year in revenue and handset unit sales -- in Dallas. Dresdner argued that consensus forecasts for Nokia's 2002 earnings per share, currently around 82 cents to 83 cents, should rise to around 90 cents if Nokia is as confident as expected, since official estimates tend to trail unofficial expectations. Merrill Lynch, which joins rivals Credit Suisse First Boston Corp. and Goldman Sachs Group Inc. (NYSE:GS - News) in turning more positive on Nokia since its third-quarter results, said it raised its forecast based on the assumption that increased demand for replacement handsets will arise in 2003 and 2004, aided by subsidies from operators and new features. It said it is unlikely that consumers will keep their handsets for longer than three to four years, meaning Europe looks set to be the major replacement market in 2003 and 2004 as consumers replace their aging handsets with new models featuring color screens and built-in cameras. Merrill added that it expects Nokia to continue to gain market share going forward. The upgrade followed a report last week from research firm Gartner Dataquest which showed a 7.8% increase in worldwide mobile phone sales in the third quarter. Gartner advised that the positive momentum is likely to continue into the fourth quarter. Not every company with exposure to the handset market is set for gains, Merrill warned. The investment bank downgraded forecasts for Europe's biggest chip maker, STMicroelectronics NV , which is sensitive to changes in handset royalties. Merrill said that ARM's valuation is more attractive, given that the U.K. company is most exposed to the handset sector. Rival U.S. investment bank J.P. Morgan Chase & Co. (JPM) doesn't share Merrill Lynch's enthusiasm for Nokia, rating the stock at "neutral." The bank recently cut its forecasts for the handset maker, arguing that optimism on replacement sales could be short-lived, and that until there's evidence of a sustained upturn, Nokia is fairly valued at 14 euros.