More from Barron's Article
Tech Investors Are Acting Irrationally, But a Few Guys Do Have Their Heads on Straight
By ERIC J. SAVITZ (Nov. 3, 1997)
Dan Hutcheson, president of VLSI Research, a San Jose firm that tracks the semiconductor-equipment industry, reckons that investors have been handed a buying opportunity.
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Hutcheson expects global chip-equipment sales to grow 21% next year, up from just 5% this year. In 1999, Hutcheson predicts, sales growth could hit 30%, propelled by the chip industry's move to parts with smaller and smaller lines, first 0.25 micron from the current 0.35 micron standard, then 0.18 micron in subsequent years. Hutcheson, it turns out, is nearly as optimistic about overall chip demand, forecasting revenue growth of 22.3% in 1998, up from 9.3% this year. "If I were in the business of recommending stocks," he says, "I'd be recommending buying across the board."
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... Michael Murphy, editor of the California Technology Stock Letter, ... , has been scooping up shares of some smaller semiconductor equipment stocks, including Mattson Technology, Genus and Quickturn Design Systems, and he's been mulling investments in larger-cap names like Applied Materials. He's also beefed up in chip stocks, like LSI Logic, Cypress Semiconductor, Cirrus Logic and Integrated Device Technology.
Murphy thinks Integrated Device could be a prime beneficiary of the rise of PCs selling for less than $1,000. ..
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Halla-lujah: Speaking to a group of reporters before the Semiconductor Industry Association's annual dinner in San Jose last week, National Semiconductor CEO Brian Halla made a startling prediction. Halla says microprocessor sales will run about 80 million units next year, moving to 800 million units within the following three years or so -- that's right, a tenfold increase. Halla, who can barely contain his glee about National's pending acquisition of Cyrix, one of Intel's other rivals in microprocessors, expects the bulk of that total to be used in sub-$1,000 computers that can run Windows and in "information appliances," like set-top boxes and network computers. For the record, SIA expects worldwide semiconductor revenues next year to grow 16.8%, up from 5.5% this year. You can bet that forecast doesn't reflect Halla's wildly optimistic view.
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Ask around the Street about the market's hottest tech investor, and the name you keep hearing is Raj Rajaratnam, who left Needham & Co. last year to set up Galleon Management, where he runs a hedge fund that invests only in technology. From a standing start in January, Rajaratnam has built his fund to $800 million in assets, which makes it one of the largest tech-only hedge funds around.
Through the end of the third quarter, Rajaratnam's fund was up about 30%. At the moment, though, he's feeling nervous about the prospects for the sector -- his fund is just 35% net long, holding a huge cash position. For one thing, he's concerned about Intel. While there's strong demand at the low end of its line, Rajaratnam says, "the high end is not selling like Intel expected. The $1,000 PC does not play into Intel's strengths." |
