These TSC articles on the RS Conference are filled with great stuff about the Street's current view of the Semi sector. Here are some more relevant parts:
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Silicon Valley: Robbie Stephens Semi
Conference: Day One's First Read of
Year-End Numbers
By Marcy Burstiner, Jeffrey Hoffman and Cory Johnson
Staff Reporters
7/29/98 3:51 PM ET
SAN FRANCISCO -- The gathering of some 1,200 mutual
fund managers and 95 companies here at the two-day
Robertson Stephens Semiconductor conference is kind of
like a gathering of the Optimists' Club in part of a larger
doomsday cult -- people are looking for good news in a world
of semiconductor nightmares. The hallways of the
sumptuous Ritz-Carlton Hotel are filled with people talking
about Asia, Asia, Asia, as if she's the oldest girl in the
Brady Bunch.
And, after one morning, it seems that the Asia news isn't
any better (surely pleasing Jan), but, perhaps, just perhaps,
there is good news coming for PC sales.
Laptops on the Rise
NeoMagic (NMGC:Nasdaq) went public in March of 1997
with Dell (DELL:Nasdaq) as its only customer. "Not," says
Chief Financial Officer Merle McClendon, "a bad customer to
have."
But, since then, NeoMagic -- the Santa Clara, Calif.-based
multimedia laptops chip maker -- has expanded its customer
base to every big maker of PC laptops. Dell now represents
less than 20% of NeoMagic's growing revenue model (though
NeoMagic remains Dell's sole supplier of laptop multimedia
chips).
In a crowded and noisy presentation room, McClendon
explained NeoMagic's raison d'etre: the notion that
multimedia machines are not on the desktop, but in the
briefcase. "Most of us don't do presentations from our
desktop," said McClendon, one of the few women who
present at this type of conference. "So the multimedia tool of
choice is the laptop."
That unassailable logic quieted the chit-chat from the back
of the room, and the 50 or so fund managers in the room
started paying attention. McClendon demonstrated her
company's chip by playing a "Size Matters" video clip from
Godzilla. The 30-second spot, with clear video and audio,
was run on a three-pound Sony Vaio 505.
NeoMagic is on a January 31 fiscal year, so it is one of the
few companies presenting here yet to report second-quarter
earnings. Earnings are due Aug. 12, and the First Call
consensus is 26 cents per share.
After the session, McClendon offered some guidance for
those looking for an end to soft PC sales. And the end, says
McClendon, was here. "I can't tell you about overall PC
sales because we only sell into the mobile space," she
says. "But I can tell you that the mobile space is growing
very strongly. The first- and second-quarter demand was
weaker, but we see it picking up in the third and fourth
quarters."
You Gotta Get Up Early in the Morning...
Those at the conference who got to Salon 1 early enough to
have to wait for the welcome speech by Robbie Stevens
technology head Brian Bean at 7:45 a.m. had to listen to
Muzak that was a little too loud and way too upbeat for that
hour. And that only to hear Bean inform the sparse crowd
that the semiconductor industry, measured by the
Philadelphia Semiconductor Index (SOX) had dropped
by 18% over the past year while the Dow, S&P 500 and
Nasdaq had surged. Who would have known? What's his
expert opinion on the meaning of this?
He says its time to buy. Back to the Muzak.
A Poor Display for Graphics Chips
If you're looking for a turnaround in a broken chip company,
don't look for it from 3DLabs (TDDDF:Nasdaq). The stock of
the maker of graphics accelerator chips has been beaten
badly in the last two quarters, and President and CEO
Osman Kent says that Asia isn't through putting the hurt on.
"Nineteen ninety-eight," he says, "will not be good.
"Demand for our Permedia chip dried up early this year,"
says Kent. "There was oversupply of 3-D chips, in Taiwan
there was a certain amount of dumping and, in general, the
situation continues unabated today. We expect these
negative trends to continue until at least the fourth quarter,
and we expect some industry consolidation to continue."
3DLabs is hoping to use this downturn to lock in the
high-end 3-D chip market in both the high-end OEM market
(Windows NT workstation users who do graphics like those
seen in Titanic) and add-on boards used by "enthusiasts"
(i.e., video-game geeks who buy graphic accelerators from
Creative Technologies (CREAF:Nasdaq)). "3-D graphics
chips today are the most complex in a PC today," says
Kent. "The chips we will soon ship will soon be larger, in
terms of number of transistors, than CPUs themselves."
That said, Kent doesn't expect to be selling too many over
the rest of the year. " The graphics sector is still in
oversupply," Kent told TheStreet.com after the presentation.
"The optimists in the industry look for a turn-up in the fourth
quarter, but I'm on the cautious side."
More, More Moore
Why is our friend Nick Moore, who now manages a $1 billion
tech stock portfolio for Oakland-based Jurika & Voyles, the
"oft-quoted Nick Moore?"
'Cause he's a good quote!
Vintage Nick in the hallways this morning: "Beware of
companies that have the target price in the name," he says.
"Because 3DLabs is going to $3. Level One
(LEVL:Nasdaq) is going to $1. 3Dfx (TDFX:Nasdaq) ... you
get the idea."
So stay out of the way if an outfit named ZeroLogic comes
public.
[...]
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Boy, that last bit contains some unassailable logic... NOT! Just shows how much respect the sector is currently getting on the street. Sigh...
Chip |
