Merrill Lynch & Co says buy semiconductor stocks. Lehman Brothers Inc says to avoid Intel Corp, the biggest chipmaker. Salomon Smith Barney says chip orders are improving, and Credit Suisse First Boston says wait.
Investors say it's all just proof that no one really knows when chip sales might recover from a slump that may prove to be the worst the industry has ever seen.
"One day Merrill Lynch upgrades the chip stocks, the next day someone else downgrades," said Michael Balkin, principal at William Blair & Co in Chicago. "This is what life is like for a portfolio manager: always getting yanked around." After Merrill, Salomon and Lehman analysts all weighed in on how much longer the chip industry will sit in the doldrums, and on Tuesday CSFB downgraded 20 semiconductor and chip-equipment stocks.
Shares of Altera Corp, STMicroelectronics NV, Applied Materials Inc and rivals sell for as much as 35 percent more than they're worth, the analysts said.
Sales and profit at chipmakers from Altera to STMicro to Intel have withered this year, as customers work through stockpiles of semiconductors built up during boom times in 2000.
The health of the chip market has direct ties to the global economy, because it depends on so many other industries, from personal computers to telecommunications equipment to cars.
As rival analysts say they expect sales to improve in coming months, CSFB says the slump isn't over yet.
Demand for the thumbnail-sized chips that power computers, cell phones and networking gear isn't likely to rebound for another year, CSFB said. Shareholders say they've heard that before, and they're looking for help in figuring out when the shares will rise ahead of a pickup in sales.
"Business right now is poor; there's nothing groundbreaking in the [CSFB] report," said David Katz, chief investment officer at Matrix Asset Advisors Inc in New York. "It's old news." The Philadelphia Semiconductor Index fell 16.64, or 2.6 percent, to 614.91 on Tuesday.
Chip sales may fall 30 percent this year, CSFB said -- more than twice as much as the 14 percent decline predicted by the Semiconductor Industry Association trade group in June. Tool orders may not show quarter-to-quarter growth until the second half of 2002, they said.
Merrill Lynch and competitors are more optimistic. Merrill's chip analysts raised their recommendation on semiconductor shares last week, saying the worst is over for the industry. Salomon Smith Barney analyst Jonathan Joseph last week said he expects sales to bottom out this month or next.
"It is no fun being a bear. We want to be optimistic," CSFB chip analyst Charlie Glavin said. "We're breaking all the rules in terms of how bad this is."
Analysts and executives were taken by surprise when sales dropped off late last year and have continued to scale back profit and revenue estimates as the decline seems to get worse. Now, they're trying to call the bottom.
Many analysts have focused on comparing the current slump to previous cycles, driven as chipmakers rush to add capacity to meet surging demand and then cope with a flood of overcapacity when sales decline. Some industry researchers say all the time spent analyzing the past won't help.
"All bets are off," VLSI Research Inc President Dan Hutcheson wrote in a note to clients on Tuesday. "This one broke the bell curve going up and shattered it going down."
Investors worry that if they wait, they'll miss part of a rebound in the stocks, which typically rise ahead of demand. The Philadelphia Semiconductor Index has gained 33 percent since April 4, when it touched its lowest point in more than two years.
"A lot of managers are now worried about being left behind," Balkin said. "There is some panic buying going on."
Intel Chief Executive Craig Barrett and officials at other computer-related companies are predicting a rise with the back-to-school and holiday shopping seasons later this year.
There's no hard evidence from those sales yet. The back-to-school period just started, and the holidays are still months off. And a rise in demand for communications chipmakers could be even harder to predict, investors say.
"We had a CEO of a chip company come in recently and said he doesn't know when business will turn around," Matrix's Katz said.
"He said, `You can rest assured that the analysts don't have a clue either.'"
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique