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To: shane forbes who wrote (12301)	5/11/1998 8:40:00 PM
From: shane forbes	Respond to of 25814

Briefing.com lowers n/t semi ratings: ---- 21) SEMICONDUCTOR.........3............5/11..........(-) Comment: Chip stocks began the year red hot on the realization that while the industry would get sideswiped by the Asian crisisit would avoid a head-on-collision. But as we noted in our last Brief (2/5/98), the rally was driven by a change in market psychology and not industry fundamentals. Consequently, the group was unlikely to sustain its momentum for too long. As it turned out, the group started to head lower shortly thereafter (even sooner than we anticipated). Selling intensified when Intel issued its first earnings warning in recent memory and the group has struggled ever since. An inventory glut in the PC industry, stiff price competition, lingering aftershocks from Asia's turmoil and the possibility that Windows 98 will be delayed (slight dampening effect on PC demand) are all factors weighing on the industry. Add to these negatives, the fact that the group is heading into the typically slow summer months, and it is tough to make a case for outperformance. On the other hand, most of the negatives are out and priced into the stocks already. Also, the inventory problems in the PC sector are expected to clear up in the second half of the year; continued strength in European market partially offsetting weakness from Asia; reduction in supply creating more favorable pricing climate in DRAM market; and major support levels have held. What these factors suggest is that the worst is probably behind the group. But until concerns over earnings visibility are relieved, the group will do no better than keep pace with the market. We are lowering our short-term rating to coincide with our long-term rating of market perform. Stocks: Advanced Micro Devices (AMD), Altera (ALTR), Analog Devices (ADI), Atmel (ATML), C-Cube Microsystems (CUBE), Cirrus Logic (CRUS), Cypress Semiconductor (CY), Intel Corp. (INTC), International Rectifier (IRF), LSI Logic (LSI), Lattice Semiconductor (LSCC), Linear Technology (LLTC), Micron Technology (MU), Motorola (MOT), National Semiconductor (NSM), Texas Instruments (TXN), VLSI Technology (VLSI), Xilinx (XLNX). ---- Shane.