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

To: StanX Long who wrote (9133)	3/25/2003 5:29:48 PM
From: Return to Sender	Read Replies (1) \| Respond to of 96167

Semiconductors . . . Micron started with Buy at Fulcrum. The rating and bullish target reflect firm's positive pricing outlook for DRAM in the second half, cost-reduction efforts that ultimately make the company more competitive, and a favorable risk/reward ratio based on valuation analysis. Analog Devices introduced 3 new Blackfin DSPs support expectation for improving GM from the DSP business. The market opportunity for general purpose DSP is growing. Increasingly becoming a lower cost alternative to ASICs. ADI is working toward increasing the portion of DSP rev. from horizontal markets versus today’s 35%. This will boost GM because of limited direct competition and reduced customer pricing power. Like its analog business, ADI’s DSP strategy focuses on design strength rather than manufacturing. The Blackfin is positioned against Texas Instrument’s C54 and C55 families, but offers advantages similar to a TXN DSP plus OMAP in a single device. Blackfin is in a strong position to regain some lost ground. MPU street pricing for Intel parts fell modestly last week, while pricing for AMD parts was largely unchanged. In the spot market, most Intel MPUs are now trading at a mid-single-digit discount to list, and most AMD MPUs are trading at a mid-teens discount to list. Checks suggest that Intel’s 802.11a and 802.11g wireless LAN chipsets are at least several months away from sampling. The delay gives other WLAN chipset vendors an excellent opportunity to ramp up in the Pentium-M notebook market, which Intel is attempting to dominate with the Centrino campaign. As part of Intel’s land-grab strategy, only Pentium-M systems based on Intel’s WLAN chipsets will be able to use the Centrino brand name. Unhappiness about Intel’s Centrino strategy notwithstanding, checks with notebook makers in Taiwan last week suggested that the uptake of Centrino is robust. Expect PC OEMs and their suppliers to complain about Centrino, but ultimately embrace the platform in order to piggyback on Intel’s enormous ad campaign. PC demand from the government/education sector remains weak as federal funding continues to be diverted toward war efforts. Weakness in local and state spending could pose an even greater risk. Both SDRAM and DDR pricing improved in the spot market last week after two months of continuous decline. SDRAM pricing increased 4% to $3.49, while DDR pricing increased 1% to $3.55 per 256Mb. Although modest, the return to positive pricing trends is encouraging. In the contract market, pricing was unchanged in the mid-$3 range for DDR parts and in the mid-$4 range for SDRAM parts. Analysts believe historically low levels of inventory (~2 weeks) across the industry bode well for future pricing. Micron delivered better than expected Feb-03 quarter revenue last week, although losses were larger than had forecasted. The number two DRAM supplier gained market share during the quarter by implementing an aggressive inventory reduction strategy as units grew 20% Quarter over Quarter in a seasonally weak period. The strategy is not sustainable, however – Micron may have managed to raise some additional cash as a result of liquidating inventory, but only at the cost of incurring substantial losses. Micron is still several quarters away from being able to generate cash from operations. Boxmakers . . . Dell's long awaited entry into the printer market with its own branded products (with Lexmark IP) does not suggest any meaningful disruption of hardware and/or supplies pricing value proposition, although they are credible entries. As expected, launches 3 branded entries (A940 all-in-one inkjet at $139; P1500 personal laser at $289 and S2500 workgroup laser at $499) using Lexmark IP; A940 is being launched with an introductory mail-in rebate of $30. Neither systems price performance points nor cartridge pricing are disruptive --- most important, pricing inkjet cartridges at $30+ and $35+ (for mono and color) and laser toners at $70. Dell's new AIO is careful not to undercut LXK's existing entry level AIO (the X75), which is priced at $99 and carries $29 and $32 mono and color consumables price points. Dell has to realize that this is going to require protracted ground war assault over years, not mos. No reason for HPQ investors to fear; estimate that HP installed base in laser totals 60-70 million units with closer to 170MM in inkjet; our assessment is that it may take another 4 years for Dell to get to 20-25 million units. Moreover, there will continue to be clear constraints on Dell's ability to maneuver due to IP minefield. 2020insight.com