Thursday September 17, 11:22 am Eastern Time
Company Press Release
Semiconductor Market is Bottoming Out, Will
Rebound in 1999, NationsBanc Montgomery
Securities Semiconductor Analysts Tell Investors
SAN FRANCISCO--(BUSINESS WIRE)--Sept. 17, 1998--One of the most brutal downturns in the history of the
semiconductor industry is starting to bottom out, setting the stage for a rebound during 1999, according to the analysts
who follow the industry for NationsBanc Montgomery Securities (NMS).
''We think the industry is beginning to form a bottom. We see microprocessors leading the recovery, as end-users enter
another upgrade cycle caused by the introduction of Windows NT 5.0,'' said Jonathan Joseph, an NMS semiconductor
analyst.
Joseph's comments came at the 28th Annual NationsBanc Montgomery Securities Investment Conference, which is
running this week in San Francisco. The conference, which is the firm's largest to date, features 245 companies with a
combined market capitalization of $1.6 trillion making presentations to more than 1,900 portfolio managers. These
managers represent 280 different institutions with a combined $3.5 trillion in assets under management.
Joseph was joined at the conference's annual semiconductor industry workshop by colleagues Brett Hodess, Douglas
Lee and Clark Westmont.
For a recovery to occur, the personal computer industry needs to continue to grow, since 54 percent of all
semiconductors are used in manufacturing PCs, Joseph said. Meanwhile, the communications industry must continue
its rollout of new telecommunications equipment, such as digital wireless handsets, which have been selling briskly, and
semiconductor-based networking system software.
In addition, for a solid recovery to take place, the worldwide excess semiconductor manufacturing capacity must be
absorbed, while leading-edge manufacturers must continue with their announced plans to convert their production
facilities to the state-of-the-art 0.18 microns standard.
An added factor in a potential recovery of the U.S.-based industry is the dramatic drop in production by the Japanese
and Korean manufacturers, the NMS analysts said. With the Asian economic crisis continuing, neither Japanese nor
Korean manufacturers are expected to be influential players in the semiconductor market in the coming years, Joseph
said.
Joseph's stock recommendations among semiconductor manufacturers include Intel Corporation(Nasdaq:INTC - news;
1), Micron Technology, Inc.(1) and Texas Instruments Inc [NYSE:TXN - news].
Hodess, who follows the stocks of semiconductor equipment manufacturers, is forecasting an industry turnaround
during the second half of 1999. He expects manufacturers offering new technological advancements to lead the way.
His recommended stocks in this area include Phototronics(1), Dupont Photomask, Inc.(1), Applied Materials, Inc.(1),
Novellus Systems, Inc.(1), Teradyne, Inc., Veeco Instruments, Inc.(1) and Ultratech Stepper, Inc.(1)
Lee tracks companies that make analog devices, which are workhorse semiconductors that perform such tasks as
power management, amplification and signal transmission. This is a $20-$22 billion market growing at 10 to 15 percent
annually that has applications in virtually all key electronics products, Lee said. While these companies are in a very
attractive market segment, their stocks have been weak based on investor fears about a slowdown in end-market
demand and pricing pressures.
Lee said there were some encouraging signs in the market, such as the continued strength of the PC market, and he
offered three stock picks: Analog Devices, Inc.(1), Power Integrations, Inc.(1) and Micrel, Inc.(1)
Westmont alerted investors to the coming opportunity in semiconductors for communications equipment, particular
those that enable Internet communication. He said that major network equipment manufacturers are beginning to
outsource those components and that this sector is growing rapidly, with revenues increasing more than 30 percent
annually.
NationsBanc Montgomery Securities LLC (NMS), a subsidiary of NationsBank Corporation, is a full-service investment
bank and brokerage firm with approximately $900 million of regulatory capital. The company provides research, trading
and issuance in the equity and fixed-income markets (high yield, emerging markets, high grade and mortgage-backed
markets). Other services include M&A advisory, financial buyer coverage, loan syndications, global investment
banking, real estate finance, mortgage finance, money markets and the primary dealer.
Through NationsBank, NMS clients can also access products and services that include senior bank debt, bridge
financing, real estate banking, treasury management, trade finance and risk management (derivatives products and
foreign exchange).
NMS is a registered broker-dealer with the Securities and Exchange Commission and is a member of the National
Association of Securities Dealers and the New York Stock Exchange. NMS employs more than 2,700 investment
professionals.
(1) NationsBanc Montgomery Securities LLC currently maintains a market in this security. NationsBanc Montgomery
Securities LLC was manager or co-manager of a public offering and/or has performed investment banking or other
services for this company in the last three years.
Contact:
NationsBanc Montgomery Securities
Jennifer Smith, 415/913-5968
jasmith@montgomery.com |
