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

To: Return to Sender who wrote (9870)	5/22/2003 9:00:27 AM
From: Return to Sender	Respond to of 95737

Semiconductor Equipment . . . Photronics was upped to Buy from Neutral at Merrill Lynch. The company reported a 2nd quarter loss of $0.13, representing a $0.07 upside surprise. Strength of results leads Merrill to reduce 2003 loss estimate to ($0.38) from ($0.48). For 2004, firm raises profit outlook to $0.55 from $0.50. Price target $17.50. Semiconductors . . . Intel unveiled new processors and chipsets. 3 new P4 processors include hyper-threading technology, which allows users to multi-task without the computer slowing down. There is little reason to believe that faster chips at lower prices, per se, a relative constant in the backdrop, will do much to change aggregate supply/demand dynamics for the PC market in the absence of major new application drivers or technology shifts that accelerate obsolescence of installed systems. Morgan Stanley raised their 2004 estimates on National Semi to $0.85 from $0.75 (consensus $0.62) and raised their price target to $30 from $25 after the company announced that it is shutting down its wireless baseband business. The firm believes this action should save about $9-$10 million per quarter in expenses, and they also note that the stock trades at 2.4x their 2004 sales estimate, which represents a 30% discount to the semi sector average. National Semiconductor is on track with the 'profit-improvement' initiative launched in February. The company said it's still actively pursuing a sale of its Information Appliance unit, and that it has closed its cellular base-band business unit, effectively immediately. The moves have resulted in a workforce reduction of 340 positions. The company expects to record a charge of between $25 million and $30 million in the fourth quarter related to the restructuring. National Semiconductor also left intact its outlook for revenue ranging from $420 million and $432 million in the fourth quarter, representing sequential growth of 4 to 7 percent. SanDisk was upped to Outperform at Thomas Weisel. The upgrade from Peer Perform is based on accelerating fundamentals. Firm's recent checks with several cellular handset OEMs suggest that their upcoming multimedia and data-intensive phones will embed NAND memory at a faster pace than previously anticipated. Firm also believes that 2nd quarter pricing is tracking significantly ahead of SNDK's down 10-15% sequential guidance. Price target is $38. Boxmakers . . . Hewlett-Packard reported 2nd quarter 2003 revenue and EPS upside and outlook for second-half of 2003 was in line with expectations. The key issue is whether the 2nd quarter 2003's good performance is another "one in a row" -- like the strong results in 4th quarter 2002 followed by a weaker 1st quarter 2003 -- or whether this can be a trend. As investors focus on 2004 estimates, the stock can have modest upsides from current levels to $19-$21 level. Key Issues: H-P has made good progress on cost reductions, is now profitable in its PC business, and losses in its enterprise business have narrowed significantly in 2nd quarter 2003. However, revenues still aren't growing, Services margins have weakened, and estimates for second-half 2003 are back-end loaded with further workforce cuts/restructuring helping H-P meet second-half 2003 EPS expectations. H-P reported 2nd quarter 2003 EPS of $0.29 (vs. $0.19) on revenues of $18 billion (down 1% Year/Year and up 1% sequentially), above Street estimates -- as well as its outlook of $0.27 in EPS on revenues flat to down sequentially. Enterprise business came in better than our forecast on significantly narrowed losses while Services margins weakened from 1st quarter 2003, which HP attributed to continued pricing pressures. While H-P expressed comfort with Street estimates for second-half 2003, it did not provide specific EPS outlook for 3rd quarter 2003 and as noted above, estimates for H-P's second-half results are back-end loaded and visibility remains limited. Analysts are maintaining EPS estimates at $1.20 (vs. $0.79) for 2003, at $1.40 for 2004, and are initiating 2005 estimates at $1.55 in EPS. CSFB says while currency was slightly more beneficial, Hewlett-Packard posted solid results in all product groups. Firm notes that HPQ also announced plans to lay off an additional 3,500 employees. Firm believes HP will have to reduce its cost structure further in future qts, which will diminish earnings quality, especially as the world focuses more on GAAP. Lehman continues to believe that Hewlett-Packard is not as bad off competitively as most believe and that at 11x firm's 2004 estimate (versus S&P at 16x), the risk/reward ratio is very favorable. This is once again firm's favorite hardware play now that 2nd quarter estimates have been reduced. 2020insight.com

To: Return to Sender who wrote (9870)	5/22/2003 12:26:58 PM
From: Sam Citron	Read Replies (1) \| Respond to of 95737

09:17 ET Lehman on expensing stock options in semi cap equipment cos : Lehman highlights the potential impact of the expensing of stock options in the semi cap equip sector given its potential for becoming mandatory in 2004. Firm suggests the confluence of current options programs and projected expensing by the beginning of '04 could cause a considerable increase in P/E multiples for semi cap equipment cos from 26x to 112x consensus estimates for FY04. www.briefing.com