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

To: Donald Wennerstrom who wrote (10508)	7/8/2003 6:17:05 PM
From: Return to Sender	Respond to of 95520

Semiconductor Equipment . . . Taiwan Semi and United Micro expect increasing 3rd quarter analog, controller and driver chip orders from handset IC clients such as Texas Instruments and STM as SARS fears have dwindled and inventories at handset makers returned to under three-month levels. Asyst wins multi-million dollar order to provide its 300mm automated material handling system to Singapore fab, combo of United Microelectronics, Infineon Technologies, and the Singapore Economic Development Board's investment arm. Varian forecast earnings of 29 to 31 cents per share on sales of between $208 million and $210 million, less than previously expected. Four analysts are currently looking for a profit of 40 cents per share in the quarter, on average. The provider of scientific instruments and contract electronic manufacturing services attributed the shortfall to the weak U.S. dollar, which hurt international operations and raised the cost of foreign-sourced components. Varian also expects to record a number of unusual items in the third quarter, including a loss of $1 million to $1.5 million in revenue from delayed shipments, $500,000 in start-up costs related to an acquisition, and a $1.1 million restructuring charge. DuPont Photomasks will reduce its global workforce by 5 percent, or 96 positions, as the company moves to halt internal pellicle production at its Conneticut facility. The company will outsource its pellicle supply, and has signed a multi-year supply agreement with Micro Lithography. The maker of chip making equipment said it would record charges of $1.7 million to $2.2 million in its fiscal first and second quarter for the job cuts and record net proceeds of $1.7 million from the sale of pellicle assets. Semi Equipment Outlook . . . Checks suggest front-end orders for semi equipment companies could be up about 10% quarter/quarter on average for the September quarter (Novellus up 15%-20% quarter/quarter, Lam Research up about 10% quarter/quarter, and KLA-Tencor up about 5%-10% quarter/quarter). Expecting 10% sequential order growth for the December quarter. Order activity in the September quarter could include: Samsung Phase II of its Line 12 in the month of September time frame with tool delivery in 1st quarter 2004, TSMC Fab 12 (capex guidance is $1 billion-$1.5 billion, and believe it could be at the high end of range given improving utilization rates), SMIC 300mm pilot line in Beijing in the early part of July, Inotera (JV between Infineon and Nanya) in July, further orders out of Japan (Sony, Toshiba, and others), Intel Fab 24 in Ireland orders across 2nd half 2003, as well as smaller orders from others. Regarding wafer foundries, we believe wafer starts continue to be strong for TSMC and September quarter revenues could be up about 7% quarter/quarter or more. Also, we believe utilization rates could improve from 86% in the June quarter to about 90% in the September quarter, which translates to improving gross margins. Semiconductors . . . SoundView Technology expects Intel to "meet or exceed" the midpoint of its second-quarter outlook for $6.7 billion in revenue and earnings of 13 cents a share thanks to a favorable product mix. SoundView also said it expects Intel to offer a wider growth range for the third quarter. Silicon Labs upgraded at Lehman to Overweight from Equal-Weight, saying the stock has underperformed peers due to handset inventories in China and expected weakness for the company. The firm thinks expectations are lowered and that 3rd quarter and 2004 targets seem reasonable, especially in the face of historical execution, and believes that there is also an ASP expansion story in their high-margin wireline businesses. Raises target to $35 from $30. Lehman Brothers upgraded chipmakers Broadcom and Marvell Technologies to "overweight" from "equal weight," and raised its price target on Broadcom stock to $35 from $25 and on Marvell stock to $45 from $30. Arnab Chanda believes Broadcom is likely to show upside on both revenue and earnings in its latest quarter, and thinks the company's outlook will be "strong." For Marvell, Chanda feels fundamentals remain solid as the company takes market share in the storage integrated circuit market. Intel bought privately held West Bay Semiconductor for undisclosed terms. West Bay, based in Vancouver, makes optical networking chips. Lehman upgraded Marvell to Overweight from Equal-Weight based on their belief that fundamentals remain solid as the co continues to take market share in storage ICs and is well positioned to continue to take part in the transition to Gigabit Ethernet. Products in WLAN and consumer drives are new products that should provide continued top line growth into 2004. Raises target to $45 from $30. Broadcom was upgraded at Lehman to Overweight from Equal-Weight based on their belief that the company's core business has started to see signs of strength, with enterprise networking (31% of revs) likely to grow with the Gigabit Ethernet ramp in infrastructure while cable (19% of revs) has begun to grow after 2 years of sluggish performance. Raises target to $35 from $25. Boxmakers . . . Ingram Micro was upgraded at Merrill Lynch to Buy from Sell. The firm is saying the company should benefit from a normal seasonal second-half pickup in demand, while they believe that recent price competition will lessen. Hewlett-Packard target raised to $28 at Fulcrum. RobBlack.com MarketWrap: robblack.com