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

To: BWAC who wrote (11629)	9/17/2003 5:35:37 PM
From: Return to Sender	Respond to of 95891

Motorola’s semiconductor division (18% of sales) hosted an analyst’s day in Boston yesterday. With a constructive tone with regards to current business, segment heads highlighted their continued attempts to reduce cost through the “asset light” strategy and drive new product introductions, with over 250 new products in 2003. The company expects 90%-plus of its internal GSM handsets and 100% of its internal W-CDMA handsets would likely be using an i.xxx platform by the end of 2003. However, the company did acknowledge limited traction with external customers. Overall for 3rd quarter 2003, believe Motorola’s revenues tracking in line to slightly below guidance and earnings in line to slightly above company guidance. Analysts are forecasting revenues of $6.3 billion with consensus of $6.4 billion. Company guidance was for $6.3 to 6.5 billion. Analysts are forecasting EPS of $0.03 with consensus also of $0.03. Company guidance was for $0.02 to $0.04. Anlaysts believe that handset and CATV sales are tracking in line to slightly below expectations, as the delay of the triplets slightly affects handset sales. Areas of strength in the quarter are the semis segment, which is tracking above expectations and the government and wireless infrastructure segments, which are tracking in line to slightly above expectations. Analysts are encouraged by the progress the company has made recently in restructuring its operations and the improved product portfolio, including wireless handsets. However, with signs of growing commoditization, which still account for 38% of Motorola’s revenues as well as relatively weak position in wireless infrastructure, see limited upside to earnings estimates in 2004. Qualcomm expects revenues to be at the high-end of its previous announced range of 2-6%. The company now expects EPS to be at the high-end of its previously announced range of $0.27-0.29. Our estimate was $0.29 and consensus was $0.28. Qualcomm now expects 20 million in chipsets sales versus previous a forecast of 19-21 million and our forecast of 20.5 million. Checks, including announcements from Nokia, Texas Instruments, TriQuint, and others have all indicated that wireless handset unit sales have exceeded initial forecasts. We are slightly disappointed that Qualcomm did not also show strength in unit shipments relative to its previous guidance. A major reason for this lack of upside is CDMA market share gains from Nokia. Based on geographic CDMA analysis, we estimate that handset end-demand will be up q/q in the September quarter to app. 26 million from 23 million in the June quarter. However, Qualcomm chipset sales will be down app. 13% sequentially due to the inventory buildup. As a result of this inventory burn-off in September, Qualcomm’s chipset sales could be up quarter/quarter in the December quarter, but slightly below CDMA handset sales based on our belief that Nokia will be incrementally more successful. Analysts are estimating 26 million chipset sales in the December quarter. Although analysts remain optimistic on increasing unit shipments into the December quarter and calendar 2004, analysts are forecasting Qualcomm’s earnings to nonetheless be down in F2004 based on difficult comps and pricing pressure from Nokia’s entry into the CDMA handset market. Earnings should accelerate in 2005, however, as W-CDMA deployments reach critical mass. Semiconductor Equipment . . . Asyst defended by Adams Harkness. The firm reiterated their Buy rating and $20 target after the company's CFO resigned for personal reasons. The firm is not concerned about accounting issues, and continues to like the ASYT story and recommends that investors take advantage of any weakness in the stock to buy it. Asyst announces departure of CFO Geoffrey Ribar is leaving the company to pursue other personal and business interests. USB Piper Jaffray says it believes Ribar was an integral part of the ASYT turnaround team and views his departure as a potential near-term negative as the search for a new CFO continues. However, firm believes this was a personal decision, and should not reflect negatively on the co or its operations. Geoff will stay on until his replacement is onboard, facilitating the transition and mitigating any perceived risk. Semiconductors . . . Transmeta and Nvidia announced an collaboration agreement in which Nvidia will develop integrated media communications processors for use in Transmeta's new Efficeon processors. The Efficeon chip, which is currently in production, will be used in notebooks, tablet PCs, silent desktops and ulta-personal computers. Oppenheimer says that Intel spent almost no time discussing the imminent launch of its next generation desktop processor codenamed Prescott at its Developer Forum, and many industry participants felt Prescott systems would appear very late in 4th quarter, essentially missing the holiday selling period; if Prescott ships late in 4th quarter, firm believes that this is positive for AMD's Athlon 64 and Athlon XP processors, and as a result the outlook for AMD's 4th quarter is looking up. Transmeta and NVIDIA announce collaboration. NVIDIA has agreed to develop its highly integrated media communications processors for Transmeta's next generation Efficeon processor, enabling multimedia and graphics capabilities for a wide range of mobile PC platforms. RobBlack.com MarketWrap robblack.com