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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Kenya AA who wrote (40456)	12/18/1998 12:55:00 PM
From: Elwood P. Dowd	Respond to of 97611

Chips: Let the good news roll Industry report fuels semiconductor rally By Tiare Rath, CBS MarketWatch Last Update: 12:50 PM ET Dec 18, 1998 Tech Report NewsWatch SAN FRANCISCO (CBS.MW) -- Semiconductor and personal computer stocks forged ahead Friday after better-than-expected November sales figures and good reviews from industry analysts. The chip trade group Semiconductor Equipment and Materials International said the November book-to-bill ratio was 0.84, or that $84 in orders were received for each $100 worth of products shipped. The number came in ahead of some analysts' expectations. The report tracks average three-month shipments and orders for equipment used to manufacture semiconductor devices. The industry group releases the data monthly. Industry analyst Gunnar Miller at New York Equity Research expected a book-to-bill ratio of 0.77. "We believe that these statistics will support the growing consensus that incoming orders bottomed in September," he wrote in a research note. "The roughly 30 percent sequential improvements of both October and November three-month average orders are by far the sharpest sequential increases since the statistics began in 1991," he wrote. Turnaround signal While bookings were down 51 percent from a year ago, they rose 29 percent from last month, giving one more shred of hope that the industry may be turning around. Shipments during November were up 15 percent from October, albeit down 41 percent from November 1997. "Technology buys are certainly going ahead as planned in the semiconductor industry," Stanley Myers, president of Semiconductor Equipment and Materials International, said in a statement. "However, keep in mind that current business levels for the equipment industry are running about half of 1997. Technology purchases alone will not return the equipment and materials industry to its former profitability. "We certainly hope to get to the point where significant new capacity is needed before the year 2000," he said. Still, statistics showing the industry was getting stronger instead of weaker were enough to push the Philadelphia Semiconductor Index up 2.8 percent. See Silicon Stocks Applied, Intel estimates raised In addition, Applied Materials (AMAT) lit a fire under the index, rising 9.6 percent, after Goldman Sachs raised its 1999 earnings expectation on the company to 60 cents a share from 55 cents a share. Analysts at the firm also bumped up their fourth-quarter and first-quarter profit expectations on the world's largest wafer fabrication company to 5 cents a share from 3 cents a share and to 6 cents a share from 5 cents a share, respectively. The good news didn't stop there for semiconductor companies: Two analysts increased their earnings expectations for chip bellwether Intel (INTC) Friday as well. Morgan Stanley Dean Witter analyst Mark Edelstone raised his 1998 profit estimates to $3.48 a share from $3.45 a share, and increased earnings expectations in 1999 to $4.60 a share from $4.40 a share. In a research note, Edelstone cited strong demand for personal computer products and low inventories -- yet another signal of increased demand in the chip industry. The analyst also reiterated his "strong buy" rating on the stock and his $150 a share 12-month price target for Intel's shares. Prudential Securities analyst Hans Mosesmann also rose his earnings estimates on Intel Friday based on his estimates that average selling prices will rise $5 to $6 above third-quarter prices, which were about $213 to $214. Mosesmann upped his fourth-quarter earnings estimates to $1.10 a share from $1.04 a share and raised revenue expectations to $7.6 billion from $7.4 billion. The analyst said "there is excellent upside potential for the quarter," and that Intel has a good chance of beating his 1999 earnings estimates of $4.70 a share as well. First quarter confidence Both analysts expressed confidence about the first quarter of 1999. While they expected first-quarter sales to be flat, or under fourth-quarter revenue, because of a surge in holiday PC sales at the end of 1998, the numbers aren't expected to be as low as once anticipated. Intel's stock gained 3 1/8 to 120, while Applied Materials' shares jumped 3 15/16 to 45 1/16. Other leaders in the index included Novellus Systems (NVLS) and Texas Instruments (TXN), which gained 4 1/8 to 53 3/8 and 1 15/16 to 85 7/8, respectively. LAM Research (LRCX) gained 1 to 19 3/16. The Goldman Sachs Computer Hardware Index also performed well, advancing 2.3 percent after Morgan Stanley Dean Witter raised its price target on Compaq Computer (CPQ). Analysts at the firm said they expect the stock to trade at $55 a share in 12 months, up from the $40 a shares earlier expected. See Tech Report Compaq's stock rose 2 1/4 to 42 4/16. Other PC makers advanced on continued optimism about their industry: Dell Computer (DELL) gained 1 11/16 to 67 1/2; Gateway 2000 (GTW), which rose 1 13/16 to 54 11/16. International Business Machines (IBM) rose 3 3/16 to 169 1/4.