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

To: robert b furman who wrote (10833)	8/5/2003 5:54:28 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95897

Semiconductors . . . ATI Tech downgraded at Wedbush Morgan to Hold from Buy based on valuation as well as increasing competition from Intel in notebook integrated chipsets and Nvidia in integrated chipsets for both desktop and notebook. The firm expects INTC's market share to increase significantly next spring in integrated notebooks, and are now more convinced about the probability that NVDA will enter a license agreement with INTC to sell integrated chipsets for desktops and notebooks. California Micro upgraded at Needham to Buy and maintains their $4 target. The firm expects some improvement in underlying end market demand as well as ongoing market penetration gains to fuel CAMD's top-line growth, while the full year impact of recent price increases and cost reduction efforts should yield a complete return to profitability during 2005. In addition, the company's recent completion of a $5.5 million private placement of equity alleviates near-term liquidity concerns. Analysts are raising semiconductor industry revenue growth forecast for 2003 from 6.5% to 8.7% ($149.8 billion to $153.0 billion in dollar terms). Analysts have adjusted our unit growth forecast from +6.0% to +6.3% Year over Year, and ASP growth forecast from +0.5% to +2.3% for the year. Analyst highlight that they are not changing unit forecast significantly, and the increase is primarily due to higher ASP assumptions. SIA released data for the month of June over the weekend. Continuing the trend from May, slightly better than expected ASPs led to a slight upside in revenues. 3MMA ASPs were flat vs. May, vs. forecast of a 1.7% decline. Looking ahead, Year over Year unit growth rates bottomed in June, but expect Year over Year revenue growth to decline through 2nd half 2003, due to increasingly difficult prior year ASP comparisons. Recent datapoints from end markets have also been encouraging and point to a somewhat better 2nd half. Analysts recently raised their PC unit growth forecast for 2003 from 6% to 9%, based on the strength in notebooks. On the communications side, expect decent sequential handset unit growth in 2nd half given a weak 2nd quarter, while wireline semiconductor revenues should have stopped deteriorating. The industry is likely to experience normal seasonal patterns in 2nd half 2003, and do not expect to see major signs of an expansion cycle this year, given that IT spending remains lackluster. However, continue to expect growth to accelerate in 2004, with low-to-mid-teens revenue growth. Top stock recommendations are: Intel, Samsung, Intersil, VIA and ASE Test. Analysts have raised estimates and/or upgraded ratings on all the above stocks over the past month. Intel’s margin expansion will continue through 2nd half 2003 and 2004, even in a slow revenue growth environment. Samsung's valuation as compelling, at 9.6x, and we believe the re-rating of its valuation should continue in the medium-term. robblack.com