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

To: BWAC who wrote (11827)	9/25/2003 5:52:20 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95521

Semiconductors . . . Analog Devices upped Buy at Sanders Morris Harris. The upgrade from Hold comes amid firm's view that the Industrial market (35-40% of company's revs) appears to be on the cusp of a stronger rebound phase. Firm's price target is $50. Morgan Stanley is commenting that Broadcom is having a very strong quarter and believes the stock should be bought aggressively. Maxim Integrated added to Focus List at Wedbush Morgan. The firm's 12-month target remains $57 (40x 2004 estimate of $1.43). Firm believes MXIM has arguably the best business model among the best segment of the whole semiconductor industry -- high performance analog ICs. NVIDIA started with a Neutral at UBS and target of $17.50. The firm believes its current desktop product generation is disappointing, the co will continue to have margin pressure with no catalysts near-term growth. However, its longer-term view suggests the sector is growing and NVDA will turn around. The analyst is encouraged by its recent acquisition of MediaQ and the prospects for Nvidia to be a growing supplier of graphics processors in handsets in the next 6-12 months. The firm's target is based on a multiple of 23 times our 2005 EPS estimate of $0.77 Micron, as expected, was fairly upbeat on its call, citing strong PC demand and its low inventory levels. However, while the company's inventory remains minimal, currently at two weeks, recent checks with module makers and distributors indicates that channel DRAM inventory continues to remain above normal levels. There is also evidence of some OEMs dumping inventory into the spot market. Expect DRAM bit supply growth in 4th quarter 2003 to accelerate to 18% Quarter over Quarter, which, based on the 19%-20% Quarter over Quarter bit demand growth forecast from Micron's customers, means demand and supply will be roughly in balance for the quarter as a whole. Though the holiday season build occurs earlier in the quarter, expect this to be tempered by the already high levels of channel inventory. Believe the rising premium of contract over spot prices, currently 10%-15%, will take its toll and lead to resistance towards significant contract price increases in 4th quarter. With regards to Intel's $450 million investment in Micron, would highlight there is no change to Micron's capex plan for fiscal 2004 as a result of the cash infusion, though the investment increases flexibility for its 300mm ramp. Micron’s August-Quarter earnings were roughly in line with expectations. Loss per share of $(0.20) was marginally better than our estimate of $(0.23) and consensus of $(0.25), and pro forma EPS of $(0.31) was roughly in line with estimates of $(0.33). Revenues of $890mn (+21% Quarter over Quarter) were slightly lower than our estimate of $917mn (+25% Quarter over Quarter), but above consensus estimate of $867mn (+18% Quarter over Quarter). With regards to Intel’s $450 million investment in Micron, which gives it a sizeable 5.3% stake in the company, Micron is expected to use the proceeds primarily to increase its DDR2 memory production and support its investments in 300mm manufacturing technology. As a note, Intel’s interest in the memory market lies in ensuring that memory technology does not present a bottleneck to its platforms and that supply constraints do not hinder its roadmaps, and we see this investment as a strategic one on Intel’s part. From Micron’s perspective, note that the company did not change its capex forecast for the year as a result of the cash infusion, and continues to plan spending of slightly more than $1 billion in fiscal 2004. On the call however, Micron did indicate that the Intel investment assists it in taking 300mm technology further than it would be able to without the investment. So while there is no change to Micron’s capex plans, it clearly gives Micron greater flexibility to accelerate its 300mm ramp later on in the fiscal year if it chooses to. Micron is currently running its 300mm facility at 500 wafers per week, and plans to increase capacity each quarter. Boxmakers . . . Dell announced that it would launch a music service and begin selling a digital music player, a flat panel television screen, and a new handheld computer in 4th quarter. (While this announcement was expected, it could be seen as negative for RoxioI (-4.1%) and Apple (-1.9%), which offer their own music download services, as well as Gateway, which recently started offering consumer products.) UBS comments on the PC markets in its morning note suggesting U.S. PC sellout was up 13% year/year in 9/03 for the 4th consecutive month of growth driven by strong notebook sales. However, Europe remained stagnant with sellout -8% year/year. The firm notes year-to-date sellout in the U.S. is flat compared to last yr and Europe is down 2%. In addition, firm believes U.S indirect channel results for IBM were solid, Hewlett-Packard gained some share from July and DELL is on track for at least 25% unit growth this quarter. RobBlack.com MarketWrap robblack.com Everything traded like junk today. Not a single sector higher. Tomorrow something will be up. RtS