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

To: Return to Sender who wrote (11611)	9/15/2003 10:40:34 PM
From: Return to Sender	Respond to of 95574

Analysis: Semi industry treads firmer ground by Bolaji Ojo Silicon Strategies 09/15/2003, 9:18 AM ET siliconstrategies.com There's no longer any doubt that the semiconductor industry is recovering. But there are still questions about the strength of the recovery, following the worst downturn ever, and how long it will last. Few are willing to hazard a guess about the likely duration, but many analysts are going on record that they expect the first couple of years to show only moderate, rather than spectacular, growth. A review of third-quarter revenue forecasts by the leading IC suppliers indicates that most will experience solid growth compared with the same period last year, and representing a significant reversal of the situation two years ago when sales took a nosedive. The sales forecast for Intel Corp., the world's largest chipmaker, calls for an increase in the third quarter to $7.7 billion, up 19 percent from $6.5 billion in the same quarter a year ago. At Intel rival Advanced Micro Devices Inc., third-quarter sales are forecast to surge a whopping 68 percent, to $852 million, from $508 million in the year-ago quarter. Few companies expect to see double-digit increases of those magnitudes, but the news is good enough that some analysts have raised their estimates for the global chip market. "We are revising upwards our global semiconductor industry revenue growth forecasts in 2003 to 8 to 9 percent from 6 to 7 percent, and in 2004 to 12 to 13 percent from 9 to 12 percent," said Nicolas Gaudois, an analyst in the U.K. office of Deutsche Bank Securities Inc., in a report. "This implies a mild cyclical recovery in 2004, with the year-over-year revenue growth rate being above what we view as the long-term sustainable rate of growth (8 percent to 10 percent) achievable by the industry," added Gaudois. Many chipmakers would tend to agree. In their latest financial updates, they have forecast single-digit sales increases in the third quarter, extending into the fourth quarter. Texas Instruments Inc., for instance, told disappointed investors that third-quarter sales would be $2.39 billion to $2.49 billion. While better than the $2.2 billion reported for the third quarter of 2002, the 2 percent sequential increase from $2.34 billion in the second quarter of this year appeared too small to many investors, who proceeded last week to pound TI's stock. "While Texas Instruments has a 2 percent third-quarter revenue upside, the magnitude is unimpressive versus Intel's 7 percent revision," said Ben Lynch, an analyst with Deutsch Bank Securities in New York. Announcements by other semiconductor companies were more gladly received. Communications IC supplier TriQuint Semiconductor Inc. pleasantly surprised by raising its third-quarter revenue and profit guidance, citing higher shipments, increased orders, and improved margins. Triquint said its order backlog indicates the improvement will extend into the fourth quarter, adding that it will provide more details after announcing its quarterly results on October 23. The Hillsboro, Ore., company said it now expects third-quarter revenue to be $75 million to $77 million, compared with an earlier estimate of $70 million to $74 million. Fourth-quarter revenue is forecast to be at the upper end of Triquint's estimate of $72 million to $76 million. Gross margin for the third quarter will be between 25 percent and 28 percent, compared with the previous forecast of between 24 percent and 27 percent. "We are updating and raising our guidance for third-quarter 2003 because our shipments and bookings have been very strong so far this quarter," said Ralph Quinsey, president and chief executive of TriQuint, in a statement. "End market demand for our products for wireless phone applications has been robust." It's not just the wireless market, however, that is driving improvement. In fact, analysts contend that in addition to the consumer electronics segment, which helped to keep the industry from sinking even to lower depths during the downturn, a resurgent computer sector is powering the recovery as corporate IT buyers replace aging equipment. "We believe that the 2004 recovery will largely be driven by the computer and consumer-related segments," said Deutsch Bank's Gaudois. "We expect PC-related semiconductor revenues to grow 9.7 percent in 2003 and 13 percent in 2004. Wireless semis are likely to continue to be negatively affected by average selling price trends."

To: Return to Sender who wrote (11611)	9/16/2003 3:40:02 PM
From: Donald Wennerstrom	Read Replies (2) \| Respond to of 95574

From your report of yesterday, I just wanted to pull out the commentary by Patrick J. O'Hare and highlight a couple of areas. < From Briefing.com: A new week of trading began on Monday, but apparently, a number of people didn't show up for work, or if they did, they found other things to do instead of buying and selling stock. The volume figures pretty much said it all as a paltry 1.13 bln shares changed hands at the NYSE while 1.46 bln shares traded at the Nasdaq. The lackluster action was attributed to an unwillingness to commit to positions ahead of Tuesday's FOMC meeting. Briefing.com, for its part, isn't expecting any change in the fed funds rate nor any meaningful change in the accompanying policy statement from the one that was offered August 12 in which attention was paid to the brightening economic outlook and the continuation of disinflationary trends. Beyond the FOMC pre-occupation, investors were put off by various reports from both analysts and the media that highlighted valuation concerns for the technology stocks. A survey by Goldman Sachs on information technology spending didn't exactly light a fire under the tech stocks either as the survey suggested technology capital spending in 2003 will be no better than flat or slightly below 0.00%; meanwhile, only a modest 3.9% increase in spending is projected for 2004. That survey overshadowed a UBS upgrade of IBM (IBM 88.49 -0.21) to Buy from Neutral, and a Merrill Lynch upgrade of Applied Materials (AMAT 20.58 -0.39) and Kulicke & Soffa (KLIC 12.23 +0.34) to Buy from Neutral. Additionally, it drowned out the suggestion from Goldman Sachs itself that it would be aggressive buyers of U.S. chip equipment stocks on a dip that it feels is possible heading into earnings season due to what may be unrealistic Street expectations. That view was predicated on the belief that the stocks won't peak for the cycle until the industry hits normalized cash flow levels in early 2004. All things considered, there was little conviction on either side of the trade on Monday as participants were consumed with reconciling near-term valuation concerns with long-term prospects. The former, we suspect, will take precedence for the time being as we work through the tenuous earnings warning season. Accordingly, we anticipate a period of consolidation for the technology sector and would look to lighten positions in highflying technology names.-- Patrick J. O'Hare, Briefing.com> As is the case many times, I don't claim to understand everything I just read. The reference to "technology capital spending" in 2003 will be approximately 0.0 percent and a modest increase to 3.9 percent in 2004 sounds pretty poor, yet in the same breath, GS said they would be an "aggressive buyer" of U.S. chip equipment stocks on a dip. Observations like that tend to set my head "a spinning". Whatever GS was trying to say, it apparently did not affect the "market". Maybe the "market" had as much difficulty as I did in trying to decide what they meant and just threw in the towel like I did?:) Don