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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Kondor who wrote (6672)	11/9/1997 11:59:00 AM
From: Stephen D. French	Respond to of 9285

Here's some general news re: friday's trading activity: TECH WATCH: SECTORWIDE DIVE TALK ABOUT a Freaky Friday. Leading tech stocks fell hard in morning trading as poor earnings, trouble in Asia and growing strength in the sub-$1,000 PC market combined to spook investors. Disk-drive maker Western Digital (WDC) was the downward catalyst when it preannounced that second-quarter earnings would be in the 20-cent to 30-cent range, well below consensus estimates of 85 cents a share. Western Digital's woeful shares fell 24% to 23 1/16 in Friday morning trading and the rest of the battered disk-drive sector followed. Industry leader Seagate Technology (SEG) dropped 5%, to 26 1/2. Interestingly, Quantum (QNTM) -- which looked to be the best-situated disk-drive maker going forward -- fell 11% to 32, down from a 52-week high of 43 (see "Quantum Leap," Sept. 16). Western Digital does a lot of business in Asia, but the real culprit was weak pricing in the sector. Bear Stearns analyst Andrew Neff lowered his rating on the stock to Neutral from Buy, which says a lot given the valuations in this industry. Western Digital, Quantum and Seagate Technology are all trading at around nine times forward earnings. Few would expect that it could get much worse. In other tech news, semiconductor stocks are getting hit across the board on news that LSI Logic (LSI), a maker of integrated circuits, will reduce capital spending by up to 50% next year. The early Friday announcement sent the stock down 5%. One of our favorites, chip-equipment maker Applied Materials (AMAT), was down 4% to 35. Novellus Systems (NVLS), one of our "Ten Stocks for the Year 2000 and Beyond," fell 2%. While influential analysts like Merrill Lynch's Thomas Kurlak keep expecting a 1998 slowdown in the semiconductor capital-equipment industry, not everybody is so pessimistic. The Information Network, an independent market-research firm in Williamsburg, Va., just came out with a survey that concluded there will be a 13.7% surge in worldwide demand for capital equipment in 1998. That compares rather favorably to this year's expected increase of 7%, says Information Network's president, Robert Castellano. "Last year we forecast a 8.2% increase for 1997, while firms like DataQuest called for minus 15% growth," he says. "Next year should be much better, and we are especially bullish on Applied Materials." -- By Eric Moskowitz