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Technology Stocks : ADI: The SHARCs are circling! -- Ignore unavailable to you. Want to Upgrade?

To: drbg who wrote (861)	3/17/1998 8:57:00 AM
From: Thai Chung	Read Replies (1) \| Respond to of 2882

To ADI thread, The Wall Street Journal Interactive Edition -- March 17, 1998 Analog Chip Makers Provide Safe Haven Amid PC Slowdown By LISA BRANSTEN THE WALL STREET JOURNAL INTERACTIVE EDITION SAN FRANCISCO -- Signs of a slowdown in personal-computer sales and economic turmoil in Asia have battered most of the bigger names in the semiconductor sector. But there has been a safe harbor in one little-watched area: companies that make analog chips. In the broad technology sector Monday, the Nasdaq Composite Index rose 16.52 to close at 1788.18, while Morgan Stanley's high-tech 35 index rose 3.27 to 526.36. Analog-chip companies have been insulated from the turmoil in much of the rest of the tech sector because their chips are used in a wide variety of products -- from industrial machines to data-networking equipment to personal computers -- and thus aren't as dependent on PC sales as other chip makers. Most semiconductor stocks are trading at 20 to 25 times calendar 1998 earnings, while the analog chip stocks are mostly trading closer to 30 times earnings, said Douglas Lee, an analyst at NationsBanc Montgomery Securities. The best-known chip companies such as Intel and Advanced Micro Devices make digital semiconductors that serve as the brains and memory-storage mechanisms for PCs and other electronic devices. Where digital chips read the zeros and ones of binary code, analog chips read "real world" phenomena such as sound, light, heat or electricity. Among the most important class of analog chips are those that monitor and manage electrical power in different devices. Both Intel and AMD have been hit hard by the slackening of demand in the PC sector. In early March, Intel shares tumbled 13% in one day after the company warned that profit and revenue would be below analysts' expectations. As of Monday, Intel was about 25% off its 52-week high of 102 and AMD was trading at less than half of its 52-week high of 45 3/4. Both of those stocks posted small gains Monday, with Intel adding 1 1/16 at 77 11/16 on the Nasdaq Stock Market and AMD up 1 1/16 to 23 on the New York Stock Exchange. Meanwhile, analog companies Analog Devices, Maxim Integrated Products and Linear Technology are within 10% of their highs. Micrel, which shot up through the early part of last year, was within 17% of its 52-week high. On Monday, Micrel gained 2 1/2, or 6.9%, to close at 39, Maxim was up 1 1/4 to 39 3/16, Linear added 1 1/4 to 72 1/8, all on Nasdaq, while Analog Devices edged down 5/16 to 33 7/16 on the Big Board. A diverse customer base has been a key factor helping the analog chip companies hold steady through the market's rollercoaster ride, Mr. Lee said. Weakness in the PC sector, for example, should be offset by strength in other areas such as networking equipment. Nimal Villipuram, an analyst at Bear Stearns & Co., said that growth in personal electronic devices should also help help the analog chip companies because items such as digital video and digital still cameras need the specialised power management chips. He said he was bullish on the two analog stocks he follows, Maxim and Linear, adding that "the only reason I'm not pounding the table is that they're pretty close to reasonable valuation." Monday's Market Activity Elsewhere in the technology sector Monday,Iomegafell 1 1/2, or 17%, to 7 1/8 on the Big Board. The maker of removable data-storage devices said it would post a loss in the first quarter due to weak sales and marketing expenses (see article). 360 Communications fell 4 3/8 to 31 1/4 on the Big Board. Alltel, in a move to bolster its wireless-phone-service assets, plans to acquire cellular provider 360 in a stock swap valued at more than $4 billion, plus the assumption of $1.8 billion in debt (see article). But the stock deal, which values each 360 share at 0.71 Alltel share, was below the rumored figure Friday of $40 a share. Alltel lost 15/16 to 44 7/8 on the Big Board. Secure Computing shares rose 2 1/16, or 17%, to 14 on Nasdaq, as rumors circulated that the company could be the next computer-security firm to be snapped up as an acquisition (see article). Ingram Micro fell 5/8 to 39 13/16 on the Big Board. Morgan Stanley Dean Witter cut its rating on the stock of the computer distributor to "outperform" from "strong buy." Symantec was unchanged at 26 5/8 on Nasdaq. Volpe Brown Whelan raised its rating on the stock of the security-software company to "buy" from "neutral."