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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (23064)	8/18/1998 9:14:00 PM
From: Proud_Infidel	Respond to of 70976

From today's WSJ: ++++++++++++++++++++++++++++++++++= Chip-Gear Makers Advance Despite Analysts' Skepticism By NICK WINGFIELD SAN FRANCISCO -- Investors rallied around the stocks of leading semiconductor equipment firms Monday on signs of improved memory-chip pricing and microprocessor shortages, but Wall Street analysts cautioned that the sector isn't close to recovering from its slump. Shares of Novellus Systems led the upswing, jumping 3 5/16, or 9.1%, to close at 39 11/16, in active trading on the Nasdaq Stock Market. Two other leading equipment companies also saw gains: Applied Materials rose 2 1/8, or 6.8%, to 33 1/4, and KLA-Tencor edged up 3, or 11%, to 31 1/8, both in active Nasdaq trading. Meanwhile, the Nasdaq Composite Index rose 27.85 to 1818.04, while Morgan Stanley's high-tech 35 index gained 12.17 to 596.61. Although analysts said little has changed concerning the prospects of equipment makers, they said investors are likely reacting to encouraging evidence that the companies' customers, the semiconductor makers, are seeing some improvement in business. Last week, Micron Technology, a manufacturer of dynamic random-access memory chips, saw its shares surge nearly 10% after analysts said prices for DRAMs were beginning to increase. The DRAM market has been plagued by a severe glut, which has driven down prices on chips to bargain-basement levels. Analysts said another piece of news from last week could be energizing the stocks of Novellus and others: Intel -- the world's leading maker of microprocessors, the chips that supply the brains for personal computers -- said it's running low on supplies of certain models of its Pentium II line of microprocessors. Analysts cautioned at the time that the shortage of chips, which run at 266 megahertz and 300 megahertz speeds, doesn't necessarily indicate a huge upswing in demand for its products. Still, investors appeared to interpret the news as a favorable sign that Intel is recovering from a chip oversupply -- and that equipment suppliers may also benefit. Michael O'Brien, an analyst at Soundview Financial Group, said investors in equipment firms are typically on the lookout for positive news from the semiconductor business so they can invest early in the companies before their fundamentals change. But Mr. O'Brien doubted whether the news from Intel or Micron represented a returned to sustained growth in the semiconductor business. "I think people are going to have a false reality," said Mr. O'Brien, adding that the news from Intel and Micron probably represented a short-lived spike in demand due to the back-to-school selling season. "If it lasts, then it is good news." Novellus, for one, isn't predicting a recovery anytime soon: Last week, the San Jose, Calif., firm said in a quarterly filing with the U.S. Securities Exchange Commission that it expects net sales for the third and fourth quarters to be approximately 25% lower than its second-quarter net sales of $142.8 million. That means net sales for the remaining two quarters of the year will be approximately $107 million. The company reported net sales of $155.1 million third of 1997 and $162.8 million for the fourth quarter. Brett Hodess, an analyst at NationsBank Montgomery Securities Inc., said that equipment firms haven't seen the last of their revenue declines, but he added that the rate of revenue decline was likely to slow substantially in the coming quarters. "We haven't hit bottom yet," Mr. Hodess said. Mr. O'Brien, for his part, predicts equipment firms will see improvements in orders for its products in the second quarter of 1999 and revenue growth in the second half of 1999.