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

To: Gottfried who wrote (9107)	3/21/2003 8:51:30 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95536

EMS . . . Solectron will fire another 12,000 workers and forecast a loss this quarter. SLR reported adjusted EPS of ($0.01) versus guidance of ($0.02) to break-even. Revenue of $2.8 billion (-5% Quarter/Quarter; –10% Year/Year) compares with guidance of $2.8-3.0 billion. Light revenue was mainly due to seasonality, weakness in end-markets, and end of a program in consumer printers. SLR also cited no near-term sign of demand recovery and announced an additional 20% cut in capacity (utilization currently at 56%). Guidance is for EPS of ($0.01)-($0.04), on revenues of $2.6-2.9 billion (-2% Quarter/Quarter). Top customers included: Hewlett Packard 12% of revenues, Nortel 11% and Cisco 10%. Standard & Poor's lowered Solectron's corporate credit rating to "BB-" from "BB" -- already below the lowest investment-grade rating of "BBB-" -- after the electronics manufacturing services provider indicated late Thursday that revenue for the current quarter would fall short of expectations, and announced a restructuring that would lead to 12,000 layoffs. S&P also assigned a "BB" rating on the company's new $450 million senior secured credit facility, with a "negative" outlook. The debt rating service added that the company's liquidity position was "adequate." Network Equipment . . . There were several events recently with implications for Cisco. Yesterday morning, Cisco announced the acquisition of privately held Linksys Group. Linksys is a provider of home networking products (wired and wireless). Cisco is paying $500 million in stock with the assumption of options. The deal is expected to close in 4th quarter 2003 (Ending July) and be dilutive by a penny to 2004 GAAP EPS. Overall, most analysts are neutral on the acquisition. Linksys should provide a new growth market at a reasonable price. However, analysts are slightly concerned about prospects for the acquisition to drive anywhere near Cisco-like profitability. Cisco has recognized the lack of growth available in its current markets and may be more willing to move into less attractive markets to spur the top line. Jabil Circuit released results on March 19th. The company is a major EMS provider for Cisco. Approximately one quarter of Jabil's $1.1 billion in quarterly revenues is derived from networking, mainly Cisco. On the company's conference call, Jabil management stated that networking will be down 4%-6% sequentially. These levels are slightly weaker than we would have expected for Cisco's business. 3Com announced a JV with Huawei. This development is slightly negative for Cisco. Cisco filed a lawsuit against Huawei and the company subsequently pulled out of the U.S. market. With the JV, Cisco will have a competitor back in the U.S. enterprise networking market with a more extensive channel to utilize. 3Com management believes the products do not infringe on the IPR of others. Semiconductor Equipment . . . CIBC World Markets says KLA-Tencor competitor Applied Materials took an aggressive process diagnostic & control posture at its analyst meeting: company announced plans to launch 3 new inspection platforms head to head with KLAC by year end. While KLAC still dominant in PDC, a broader front from AMAT will at very least cause order postponement, demand for discounts from customers; believes AMAT plans 20%-30% lower pricing Electro Scientific Industries (maker of equipment used to test electronic components) will restate its financial results for the quarters ended Aug. 31 and Nov. 30 as a result of an ongoing review of accounting matters. Applied Materials cut to Neutral at UBS on valuation. Price target $15. AMAT expects capex to improve in 2nd half. The company is expecting a strong 2004 driven by 300mm & 130nm. This is in line w/outlook for 2nd half pickup and +30% in 2004. Management said AMAT might have gained some share in the 300mm, 130nm and process diagnostic & control market. This supports our belief that AMAT's competitive position remains strong. After the ongoing restructuring activities, AMAT believes it can regain peak gross and net margins (of 2000) on slightly lower revenue levels in the next cycle. L-T model already incorporates such assumptions. Management did not discuss the current quarter outlook and guidance. Current valuation at 2.6x book suggests only modest downside vs. 1.8x and 2.9x at 1996 and 1998 troughs, and 2.5x in 2001. Semiconductors . . . Lehman believes that Cisco's purchase of Linksys is a positive for Integrated Silicon and Broadcom, as Cisco's presence will likely accelerate SOHO WLAN market growth. For ISIL, firm thinks this could allow the co to gain back some share in 802.11g as CSCO dual-sources .11g chipsets, and for BRCM, this should reinforce the strong BRCM/CSCO relationship in Ethernet which previously did not crossover into wireless LAN. Firm also believes that Marvell should benefit as well. Microtune (maker of radio frequency tuners) used in cable modems and digital television sets won a patent dispute against rival Broadcom. The court also found that Broadcom's infringement was "willful," the company said. Microtune expects the court to schedule a hearing within a month to consider the issues of granting an injunction and to determine the amount of damages. ATI Technologies reported a fiscal second-quarter net loss of $8.3 million, or 4 cents a share, versus a profit of 2 cents a share in the year-earlier period. Excluding one-time items, the company earned 4 cents a share, above the average analyst estimate of 2 cents a share. Revenue for the quarter ending February declined 1.1 percent to $318.5 million, versus analyst forecasts of $292 million. Looking ahead, the developer of 3D graphics technologies is projecting revenue of $300 million and earnings to "improve" in the current quarter, versus analyst expectations of $298.5 million and 3 cents a share, respectively. UBS Warburg downgraded NVIDIA to Reduce from Neutral. The firm cited competitive challenges that are likely to manifest over the balance of 2003, such as challenges from existing and next-generation integrated products out of Intel, inroads in the performance category made by ATYT, and uncertainties surrounding next-generation gaming console prospects. Target is $11. Boxmakers . . . Apple Computer will host its developers' conference June 23-27 in San Francisco, instead of May 19-23 in San Jose, Calif. The company wants time to give software developers a more "complete" preview release of the next Macintosh operating system, code-named Panther. 2020insight.com

To: Gottfried who wrote (9107)	3/24/2003 9:06:58 PM
From: Gottfried	Read Replies (2) \| Respond to of 95536

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