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

To: The Ox who wrote (14272)	3/31/2004 8:49:55 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95718

From Briefing.com: 2:17PM Benchmark Elec reaffirms Q1 outlook (BHE) 30.06 -1.93: Co reaffirms Q1 (Mar) EPS guidance of $0.33-0.37 and revenue guidance of $470-485 mln, Reuters consensus is $0.35 and $480 mln, respectively. 1:44PM Kulicke & Soffa achieves record equipment orders (KLIC) 11.65 -0.10: Co announces it has received a record number of ball bonder orders for a single quarter, from a growing customer base. One of those new customers is Formosa Advanced Technologies Co, which placed its initial order for K&S ball bonders, with immediate delivery needed at their Taiwan manufacturing facility. 9:34AM BRCD cut to Hold at AmTech 6.96 -0.13: -- Update -- AmTech downgrades Brocade (BRCD) to Hold from Buy based on the following reasons: 1) firm suspects key areas of weakness for QLGC are OEMs H-P and Sun, and BRCD has noticeable exposure at 20-22% of rev at H-P and 10-12% exposure at Sun; 2) valuation is expensive at 2.7x sales vs 1.5x for MCDTA, and they believe BRCD's valuation prices in material upside surprises and they are not confident in the co's ability to do so; and 3) firm is growing more cautious on competition from Qlogic and Cisco that could impact margins and growth. 7:52AM Feb chip sales predicted to come in at $15.25 bln by analyst -- Silicon Strategies : Silicon Strategies reports that worldwide chip sales figures for Feb 2004, due to be published Thursday as a three-month moving average, have been predicted to come in at $15.25 bln by analysts at Handelsbanken Capital Markets. In a report issued a few days ahead of the expected publication of worldwide semiconductor market data for Feb by World Semiconductor Trade Statistics and the Semiconductor Industry Association, the analysts said they expected worldwide chip sales in Jan to have a three-month moving average down by $300 mln from the $15.55 bln recorded against Jan by the SIA. Although a Feb average of $15.25 bln would be a decline, on a seasonally adjusted basis it is 4% better than Jan according to the report and would mark the best sales month since Dec 2000, Handelsbanken said. 7:40AM Western Digital upgraded at Thomas Weisel (WDC) 11.19: Thomas Weisel upgrades WDC to Outperform from Peer Perform, saying checks suggest that the co is poised to gain share in the March qtr; firm believes that the co has made great strides in its magnetic head operations in the past two months, and they expect it to gain traction in the consumer mkt throughout the year with new design wins and increased mkt share. 2:06PM QLogic (QLGC) 33.55 -9.14: QLogic lowered Q4 revenue guidance from $138-141MM to $128MM (+6.2% Y/Y) due to weaker than expected demand for host bus adapters from two OEM customers. EPS is projected to come in at $0.36. Reuters Research prints consensus EPS at $0.38 on $140.23MM. Management expects blended gross margin to be stable Q/Q. The company posted Q3 gross margin of 68.7% (+455 bps Y/Y) on a 20.1% Y/Y increase in sales to $137.064MM. Operating margin increased 723 bps Y/Y to 41.2%. Adjusting for today's 21% pullback, shares are, based on our inverted EVA / DCF model, priced for sustained upper teens to 20% revenue growth from F06 assuming stable 39-40% operating margin. Industry forecasts project the storage market to grow in excess of 20% per year over the next few years, providing support for the market's long-term growth expectations for QLGC. Operating margin expectations are in-line to modestly below recent operating performance. The following table shows price multiples and Y/Y growth rates for QLGC compared against peers in the computer systems & peripherals, communications equipment and semiconductor groups.Company P/SG Ratio P/OPG Ratio P/S Y/Y Revenue Growth TTM 2004E 2005E TTM 2004E 2005E QLogic (QLGC) 3.7 11.9 6.1 5.9 5.1 25.6% 21.6% 16.5% Brocade (BRCD) 2.2 (14.6) 3.4 2.9 2.6 (2.7%) 12.8% 13.9% Emulex (ELX) 2.8 18.4 5.3 4.4 3.6 18.8% 25.2% 21.2% McData (MCDTA) 1.2 97.3 1.9 1.7 1.4 4.0% 16.8% 16.1% Adaptec (ADPT) 1.4 (32.7) 2.1 2.1 2.0 6.5% 2.2% 7.7% Cisco Systems (CSCO) 4.7 22.8 8.1 7.5 6.6 3.2% 15.3% 12.6% LSI Logic (LSI) 1.7 (16.9) 2.1 1.9 1.7 (6.8%) 15.4% 12.1% Computer Systems & Peripherals 1.0 18.5 1.4 10.1% Communications Equipment 1.9 38.3 2.4 (4.8%) Semiconductors 2.8 55.9 4.5 14.6% Blended 1.6 31.6 2.2 5.2% P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of March 26, 2004. *P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of March 26, 2004. QLGC shares trades at a premium to a broad range of competitors despite today's pullback. Given the premium market pricing, and growth and operating margin expectations that are above guidance, we would wait for an additional 8-13% pullback or for growth to reaccelerate back into the high teens range before initiating a minor position. We would open a position in McData (MCDTA 6.85 -0.15). MCDTA shares have declined over 15% since the Q4 review (Story Stocks, February 27, 2004) when we commented that we would wait for an 8-13% pullback, and are down over 28% since the Q3 review (Story Stocks, December 2, 2003) when we suggested investors wait for a 20-25% decline before buying shares.--Ping Yu, Briefing.com 10:22AM ATI Technologies (ATYT) 16.46 +0.16: ATI Technologies reported Q2 results before the open. The designer and manufacturer of 3D graphics and digital media silicon solutions printed EPS of $0.19 on revenue of $463.337 (+47.8% Y/Y) vs. Reuters Research consensus at $0.16 on $453.02MM. The company is experiencing above-average seasonal demand, with strong retail and add-in-board demand more than offsetting softer OEM sales. Gross margin increased 596 bps Y/Y to 34.8% on strength across all desktop products. Operating margin, excluding extraordinary items, increased 995 bps Y/Y to 12.2%. Guided for Q3 revenue of $440-480MM (+38.1-50.7% Y/Y). Consensus EPS is at $0.15 on $454.73MM. Shares are, based on our inverted EVA / DCF model, priced for sustained low 30% revenue growth from F06 assuming steady Y/Y improvement to 19-20% operating margin. ATYT has a number of new products scheduled for release in Q3 and Q4. The new product and geographic market opportunities support near-term growth above the low 30% rate reflected in our model but the company will be challenged to consistently deliver low 30% growth over the long-term. Margins are likely to continue to improve as a result of the migration to 0.13µ, 0.11µ and 90nm process technologies but operating margin expectations already factor in material improvement from current levels and are at the high end of the company's historical range. The following table shows price multiples and Y/Y growth rates for ATYT compared against peers in the computer systems & peripherals and semiconductor groups.Company P/SG Ratio *P/OPG Ratio P/S Y/Y Revenue Growth TTM 2004E 2005E TTM 2004E 2005E ATI Technologies (ATYT) 1.0 25.2 2.5 2.2 1.9 18.8% 33.6% 13.4% Creative Technology (CREAF) 1.0 25.2 1.3 n/a n/a (6.0%) n/a n/a nVidia (NVDA) 1.8 51.8 2.2 2.1 2.0 (4.5%) 10.7% 7.7% Intel (INTC) 3.4 16.8 5.9 5.1 4.6 12.6% 14.9% 11.2% Trident Microsystems (TRID) 6.3 (81.2) 6.6 6.5 4.6 (31.6%) 0.3% 41.8% Semiconductors 2.8 55.9 4.5 14.6% Computer Systems & Peripherals 1.0 18.5 2.4 (4.8%) Blended 1.5 27.9 2.9 11.2% P/SG Ratio: Trailing 12 month (Price / Sales) / Growth ratio as of March 26, 2004. **P/OPG Ratio: Trailing 12 month (Price / Operating Income) / Growth ratio as of March 26, 2004. Strong Q2 results, attractive product lineup and positive outlook may help shares to trend modestly higher in a firm to strong market for tech shares but, given ongoing concerns over high expectations for revenue growth and margins expansion, we would wait for at least a 15-20% pullback before opening a new position.--Ping Yu, Briefing.com finance.yahoo.com