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

To: The Ox who wrote (11277)	8/27/2003 4:01:01 PM
From: Sam Citron	Read Replies (1) \| Respond to of 95632

As speculation is so easily accommodated in the market, it seems somewhat redundant to engage in it vicariously. If I had any conviction on the direction of SOX, I would certainly trade it. The trade itself would be an embodiment of my opinion. It's size relative to my portfolio a direct expression of my conviction. Indeces are unique trading vehicles. I accept the fact that many traders view the SOX as the wind that propels their sleek racing vessels forward in the regatta of the marketplace. I, however, tend to take a somewhat longer view and prefer to focus on other forces. I see immense value in SOX as a temporary repository for money that is designated for tech but has not yet chosen a home. But I still prefer to park my money in cash until I have exercised my choice. Tech at the moment seems somewhat pricey to me though I wouldn't dare short it. More deck chairs can and will be manufactured for fools and greater fools before the current upsurge collapses. We are soon to enter a traditionally strong seasonal period combined with the strong point of the election cycle so why fight the tape?

To: The Ox who wrote (11277)	8/27/2003 5:08:06 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95632

Semiconductor Equipment . . . Novellus is scheduled to report its mid-quarter update on Thursday, Aug 28th after the market close. Novellus could reiterate order guidance of $220 million for the September quarter, up 14% quarter/quarter. Revenue and EPS guidance of $220 million and breakeven, respectively, are likely to remain intact as well. Believe the company could be positive on the conference call regarding the improvement in semiconductor industry fundamentals. Also, the company may be looking at several cost reduction measures to improve its operating leverage. Going forward, we believe there are several fab projects outstanding and we could see continued sequential order growth through 4th quarter. Semiconductors . . . Ambrish Srivastava at Harris Nesbitt Gerard raised his rating on the semiconductor sector to "positive" amid growing confidence in the continued improvement in industry fundamentals. Srivastava believes that besides all the positive macroeconomic data, increases in average chip selling prices have been holding, suggesting the "relentless" erosion in prices may have finally ended. Among individual companies, Srivastava upgraded Broadcom, International Rectifier and Microchip Technology to "outperform" from "neutral," and RF Micro Devices , TriQuint Semiconductor and Skyworks Solutions to "neutral" from "underperform." Intel’s current risk/reward profile is not attractive according Bernstein. National Semiconductor was upgraded by Lehman Bros. to an "equal weight" rating from an "underweight." The brokerage cited a number of reasons for the move, including improving gross margin, better operating expenses, a general recovery in analog and a "reasonable" valuation. Lehman said National Semi's recent actions have increased its confidence that the company is positioned well for a recovery in the semiconductor sector. Harris Nesbitt Gerard upgrades Broadcom, International Rectifier, and Microchip to Outperform from Neutral. The firm also upgrades RF Micro, Skywest, and Triquint to Neutral from Underperform. The firm believes that besides positive macroeconomic data, firm is especially encouraged by the recent ASP trends in the semi industry and now believes the ASP increases are beginning to gain traction across various product segments, gradually putting an end to the relentless ASP erosions witnessed to date in the current cycle. ATI Tech ramping orders at Taiwan Semi and United Micro to approximately 100k wafers in 3rd quarter, which is up from 70k in 2nd quarter. The order growth is attributed to the company’s mphasis on the middle range and low end markets. In addition, the co is expected to replace Nvidia quarter as TSMC's largest customer Despite being public for only five years, Broadcom is a leading supplier in most of its markets and has earned a reputation for execution. Expect BRCM shares to be volatile due to headline risks associated with Intel entering one of its markets. Analysts think that they’ve accounted for this risk, and believe that several new product and market cycles will serve as a catalyst for the stock. Long term, the company is competitively well positioned because it sells a comprehensive silicon solution into most of its end-markets. This should enable it to increasingly “box out the competition” and grow revenues faster than the unit growth of its end-markets. Near term, the company is poised to benefit from five new product cycles—wireless local-area networks (WLAN), cell phone ICs, satellite set-top boxes, personal video recorders, and digital subscriber lines (DSL)—as well as from a market cycle as gigabit Ethernet (GigE) becomes a standard technology in enterprise networks. Product cycle risks include Intel becoming more competitive in the server chipset business, which accounts for 20% of Broadcom’s revenues. Also, the company is searching for a new CEO. Other risks include slow digital cable subscriber growth and formidable competitors and valuation. The valuation methodology used to determine $30 price target is based on a 41 times P/E multiple of our 2004 EPS estimate of $0.73. Price target assumes that the stock maintains its current NTM P/E multiple of 41 times over the next 12-18 months. Discounted cash flow (DCF) model indicates that BRCM is fairly valued at $27-$30 per share. Bear Stearns upgraded Fairchild Semiconductor to "outperform" from "peer perform." Brian Wu believes the company may witness a period of earnings growth resulting from supply constraints and firming prices. A shortage in power discretes, which account for nearly half of the company’s revenues, could be a significant catalyst for Fairchild. Power MOSFETs account for between 35-40% of total revenues. Estimate that MOSFET utilization rates, which have been rising steadily over the past few quarters, for Fairchild and most of the industry to be roughly 90%. Already seen instances of stronger demand for MOSFETs with specific package types, which have resulted in longer lead times. Pricing has also been stable for several quarters, which bodes well for the company. "We expect unit growth to remain strong over the next few years, exceeding capacity growth, which could drive a shortage as early as mid-2004," Wu said in a note to clients. He suggests being "aggressive" buyers of the stock, given an "attractive" reward vs. risk profile. The Wall Street Journal reports Intel plans to invest more than $200 million in a new semiconductor-chip facility in central China. The company plans to announce its plans for it new chip assembly and testing facility in the city of Chengdu, which is the Sichuan province capital. RobBlack.com MarketWrap robblack.com