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

To: Return to Sender who wrote (10683)	7/22/2003 6:34:40 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95479

Semiconductor Equipment . . . Lehman raises their sector weighting on the Semi Capital Equipment industry to Positive from Neutral to reflect their view that the “longest and deepest” semi equipment downturn in history is gradually ending, and the secular prospects for the industry and for individual company's are substantially better than is generally believed. Ed White, Jr upgrades Applied Materials, Lam Research, and Novellus to Overweight from Equal-Weight; downgrades Dupont Photomask to Equal-Weight from Overweight and cuts target to $19 from $23 (restructuring may take longer than expected). The firm reiterated Overweight and raises target on KLA-Tencor to $62 from $45; and initiates coverage of FORM with an Overweight rating and $24 target. Novellus 2nd quarter EPS $.05 on $239 million. $193 million orders was a little less than hoped for. Strong Japan bookings this Quarter. Given slower (60-90 day) order acceptance in Japan expect 3rd quarter revenues at $220 million - down Quarter/Quarter. If improved orders do not materialize as expected, NVLS prepared to cut costs. September order guidance of $220 million (+14%) was encouraging. NVLS talked about building order pressure that they think will result in 2nd half 2003 strength. Reducing 2004E EPS to $.74 from above consensus $.99. Reduced estimates given the $.04/Quarter impact from the unwinding of synthetic leases and modest reduction in rev/margin expectations. At 2.5x BV trading at discount to KLA Tencor & Applied Materials while maintaining a broader product portfolio versus last cycle. Highly leveraged to copper process ramps especially in ECD. Look for opportunities to build positions. Semiconductors . . . Infineon has "seen (the) first signs of a positive market trend in the last quarter and thus look forward with optimism for a stronger improvement of demand both in our logic segments as well as our memory products segment in the second half of calendar year 2003." The chipmaker plans to continue its cost reduction and restructuring programs. Infineon said it expects further reductions in capital expenditures in the global wireline telecom infrastructure market in 2003, but continues to expect moderate growth in Europe. Infineon said it expects a further positive development of demand for broadband access technology, particularly in Asia. For its Secure Mobile Solutions segment, Infineon said it expects a further moderate increase of demand for GSM/GPRS mobile handsets and Bluetooth products. Lehman upgraded wireless IC stocks under coverage, citing: 1) a strong unit story for 2nd half 2003, 2) declining inventory levels and increasing demand in Asia following SARS, 3) introduction of new handset models in 2nd half 2003, 3) reasonable valuations, 4) relative underperformance of the group versus the SOX, and 5) achievable earnings forecasts. The firm upgrades Texas Instruments to Overweight from Underweight, RF Micro Devices and Sawtek to Overweight from Equal-Weight, and Anadigics and Triquint to Equal-Weight from Underweight. Texas Instruments reported 2nd quarter revenue of $2.339 billion, up 6.7% Quarter/Quarter. EPS of $.07 topped estimates by $.01. TXN provided revenue guidance of $2.29-$2.49 billion (growth of -2.1%-6.5%). Project an increase of 2.8%. 3rd quarter EPS estimate of $.20 includes a $.13 benefit from the July 9th sale of 25 million shares of Micron. Wireless declined 5% Quarter/Quarter, which was better than expected because of strength late in the Quarter. At the opposite extreme, broadband grew 44%. DSL accounts for the majority of broadband revenue and projecting modest growth for the remainder of 2003. Trimming estimates on higher restructuring expectations. 2003E EPS to $.44 from $.47 and 2004E EPS to $.64 from $.67. Outlook improves slightly as wireless risk lessens. Texas Instrument's strength in high performance analog (+10% Quarter/Quarter) supports expectation for Linear Tech (reports 7/22) and Analog Devices (reports 8/14). Total analog business increased 5% Quarter/Quarter on strength in consumer audio/video, power mgmt, display drivers, and broadband. Lattice Semi reported 2nd quarter flat revenue of $58.2 million and in line EPS of $.02. Guiding for revenue to be $52-55 million in September (down 5-10% Quarter/Quarter). Products: CPLD was down 1%, FPGA up 7%. No specific guidance for next Quarter yet. End Markets: Comm up 18%, computing flat, other down 23%. Based on strength seen in FPGA, hopeful there would be some improvement in L-T outlook for the company. Silicon Labs upgraded at Needham to Buy from Hold following stronger than expected results. With a large number of design wins ramping up, both its Wireless and Wireline units should be well-positioned for robust growth, and the company is expected to introduce many new products over the next 18 months. Target is $36.50. Altera profit rose on strong demand for its newer semiconductor products. Altera said net income was $36.1 million, 9 cents a share, compared to $21.7 million, or 6 cents, in the year-ago quarter. The 9-cent figure was in line with the average forecast. Revenue rose to $205.3 million -- ahead of the company's projections of $200.9 million to $202.9 million, and up from $178.9 million in the year-ago period. Respondents had anticipated a figure of $201.1 million. CIBC is maintains Texas Instruments as Neutral following company's report of a penny upside EPS. Firm has concerns over clarity of wireless business: inventory issues in China and increasing competition from chipset suppliers; handset ASPs remain under pressure; Europe remains stagnant. While CIBC likes story long-term, believes more clarity is necessary to justify multiple expansion. UBS is cutting its 2003 estimate to $0.32 from $0.36 following management's reduced guidance for 3rd quarter. Price target goes to $19 from $21. Goldman Sachs says guidance causes firm to continue to wait. Boxmakers . . . Hewlett-Packard will adopt a "poison pill" provision to ward off unwanted suitors who pursue a hostile takeover. Also announced a new severance policy for senior executives. Lexmark upgraded at Soundview to Outperform from Neutral based on valuation as well as their view that 3rd quarter guidance was overly conservative and that revenue upside exists. The firm continues to believe that Dell is an incremental positive for LXK, and reiterates that Dell does not drive the pricing environment for hardware and consumables. The firm cuts target to $75 from $78. RobBlack.com MarketWrap robblack.com