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

To: Return to Sender who wrote (12807)	12/23/2003 8:37:31 PM
From: Return to Sender	Respond to of 95546

From Briefing.com: Tech shares led the market higher for a second day, with the buying interested centered around large caps. As with Monday's trading, volume was light so that a surge of buying interest late in the day propeled shares to finish near their highest levels for the day. The Philadelphia Semiconductor Index (SOXX 499.93 +8.85) rose 1.8% with advancers outpacing decliners 1.9:1; advancers gained 2.2% and decliners dropped 0.3%. The compares against the Briefing.com Tech Index, which ended the day up a more modest 0.9%. Advancers led decliners 2.1:1 with advancers gaining 2.5% and decliners dropping 2.3%. Research In Motion (RIMM 69.61 +23.51), up 51% for the day, is a good descriptor for Wall Street's response to the company's Q3 report. One analyst after another upgraded RIMM after the company reported results ahead of consensus and raised guidance. As noted on Monday's General Commentary and the Q3 review on the Story Stocks page, the RIMM train is building sales momentum as it rolls into new geographic and consumer markets. What is uncertain is whether management is able to translate RIMM's success in the enterprise market to the consumer market, and to successfully position the company within the converged computing/communications (data/voice) device market; both may be critical to sustaining valuation. Additionally, the NTP patent infringement litigation is a source of concern regarding the strength of RIMM's patent, technology and competitive position. As a result, RIMM shares range from undervalued, if management succeeds in transitioning RIMM into the consumer market and effectively positions RIMM within the converged computing/communications market, to richly valued, if management fails to successfully position the company and RIMM is relegated to a niche player. We note that at 30-31% operating margin, RIMM would need to grow revenue to over $7B per year by 2013 in order to justify current valuation on a DCF/EVA basis. This compares against management's forecast of slightly less than $600MM in revenue for F04 (Feb 2004). This train has mass and momentuim but it has alot of ground to cover. For investment-minded individuals, we would neither stand in front of this train nor hop on board at this point. The whiplash from riding this train may be painful to your portfolio. Analog Devices (ADI 44.84 +0.47), in its 10K filing, reaffirmed guidance for ~25% Y/Y revenue growth, and gross and operating margin improvements through the year. After the close, Micron Technology (MU 13.16 +0.39) published Q1 EPS of $0.00 on revenue of $1.107B vs. Reuters Research consenus estimate at ($0.06) on $1.039B. Management is encouraged by the strengthening demand picture. Average selling prices rose 7% Q/Q, contributing to gross margin improvements on both a sequential and year-over-year basis. Trading is likely to remain thin and volatile into the new year. We remain moderately bullish on technology shares over the long-term and would take advantage of the volatility to buy into quality, attractively priced names / sell richly priced shares into strength as part of a rebalancing of the tech portion of the portfolio to a neutral market weight (Please visit the Story Stocks page for the latest thinking on investment opportunities across market sectors, including tech).--Ping Yu, Briefing.com Group % Change Avg % Change Advancers Avg % Change Decliners Ratio Advancers to Decliners P/SG Ratio: Advancers P/SG Ratio: Decliners Philadelphia Semiconductor Index +1.8% 2.2% -0.3% 1.9:1 4.0 6.2 Briefing.com Tech Index(based on a composite of over 1000 tech companies) +0.9% 2.5% -2.3% 2.1:1 1.8 1.7 Audio & Video Equipment -0.2% 0.9% -2.1% 1.7:1 0.6 0.5 Communications Equipment +0.6% 2.6% -2.0% 1.4:1 2.0 1.9 Communications Services +1.3% 3.0% -1.4% 1.9:1 1.1 1.1 Computer Services +0.9% 2.4% -2.3% 2.5:1 1.9 2.1 Computer Sys & Peripherals +0.8% 2.6% -2.6% 2.1:1 1.5 1.5 Electronic Instruments & Controls +0.8% 2.6% -2.5% 1.9:1 1.5 1.1 Scientific & Technical Instruments -0.0% 2.6% -3.5% 1.3:1 1.3 1.9 Semiconductors +1.3% 0.9% -2.7% 1.4:1 2.9 2.4 Software & Programming +0.7% 2.4% -2.2% 1.8:1 1.8 1.9 1:47PM Research In Motion (RIMM) 66.34 +20.24: After the close on Monday, Research In Motion published Q3 EPS of $0.20 on revenue of $153.9MM (+107.5% Y/Y) vs. Reuters Research consensus at $0.17 on $147.5MM. Guided for Q4 EPS of $0.30-0.40 on revenue of $195-210MM (+122.9-140.0% Y/Y) vs. consensus at $0.22 on $158.3MM and Q1 of $0.35-0.50 on $220-240MM (+110.5-129.7% Y/Y). Performance P&L Line Performance Revenue Revenue rose 107.5% Y/Y, driven by new product launches by carriers and geographic expansion. Added 154K Blackberry subscribers for a total of 865K. % breakdown by revenue segment: Handheld revenue (56% of sales). Service revenue (29% of sales). Software revenue (9% of sales). OEM radios, NRE, accessories and other revenue (6% of sales). Gross Margin Gross margin improved 790 bps Y/Y and 490 bps Q/Q to 47.0%. Operating Margin Operating income improved Y/Y from ($57.756MM) to $14.065MM. Operating margin came in at 9.1% on aggressive cost containment and R&D reduction. SG&A as a percent of sales improved 2340 bps Y/Y to 17.0%. R&D declined in absolute terms and as a percent of sales by 1250 bps Y/Y to 10.2%. Valuation On an inverted DCF/EVA basis, assuming aggressive balance sheet management and steady Y/Y improvement to 30-31% operating margin, RIMM's valuation implies that the company must grow revenue in the mid 20% to low 30% range for the eight years beginning in F06 in order for investors to justify owning shares at current valuation. Assuming 20-21% operating margin, RIMM must grow the top-line in the high 30% range for the eight years beginning in F06 in order for investors to justify owning shares at current valuation. Consensus Y/Y growth for F04 and F05 is 75.1% and 30.7% respectively. On a price multiples basis, RIMM trades at 9.6x F04 revenue of $537MM and 7.4x F05 revenue of $701.6MM; 135.4x F04 EPS of $0.49 and 65.7x F05 EPS of $1.01. Summary RIMM's market valuation prices in geographic growth within the enterprise segment. RIMM is building sales momentum as the company expands geographically into Europe and Asia-Pacific markets, and as carriers roll out new product launches into the prosumer/consumer segments. However, as noted in the Q3 preview, it remains to be seen whether management is able to translate RIMM's success in the enterprise market to the consumer market, and to successfully position the company within the converged computing/communications (data/voice) device market, both may be critical to sustaining valuation. We continue to view RIMM is an option on management's ability to play convergence with a binary outcome; that: RIMM shares may be undervalued if management succeeds in transitioning RIMM into the consumer market and effectively positions RIMM within the converged computing/communications market. RIMM shares are richly valued if management fails to successfully position the company, and RIMM is relegated to a niche player. The NTP patent infringement suit is a source of concern regarding the strength of RIMM's patent, technology and competitive position (Favorable resolution of the NTP patent infringement suit would encourage us to reassess the company's competitive position in a more favorable light.). We would wait for at least a 55-65% pullback in shares before reconsidering company as a potential short-term opportunity.--Ping Yu, Briefing.com Analog Devices (ADI) 44.84 +0.47 : In its 10-K filing, co said it sees 25% revenue growth in F04 which translates to $2.56 bln, which is slightly above the $2.54 bln Reuters Research consensus. Co sees Q1 (Jan) EPS of $0.27-$0.28, which is same guidance as when co reported OctQ results on Nov 18. Consensus is $0.28. Kulicke & Soffa (KLIC) 14.01 +0.21 : Registered $205 mln in convertible notes for sale by holders. biz.yahoo.com

To: Return to Sender who wrote (12807)	12/24/2003 12:16:34 AM
From: The Ox	Respond to of 95546

We'll see how robust the recovery becomes down the road but I doubt we'll be seeing quarter after quarter of 8% growth! One of my IRA stocks is popping in the after hours, CAMP. Might be worth a good look as they seem to be hitting on all cylinders. It's difficult to judge whether or not they can sustain the revenue growth being shown at the moment? Their acquisition should be complimentary to their product line. From a future price to sales ratio (potentially $250-270 million annual rev run rate after the merger) the stock is still very reasonable. The wise move may be to wait and see if the stock backs off. Since I purchased in August, it's had an awesome run. *I'd like to add Happy Holidays and good fortune in the New Year to all our WSEA friends!!*