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Alliance Semiconductor Corporation Message Board

  • jdiev44 jdiev44 Jul 23, 2000 7:22 PM Flag

    Stick with semiconductors

    I got this from the ATML board. ATML is another
    one of my holdings that I have been suffering with
    the the last couple of weeks. It's dated 6/13/00, but
    still very relevent today.

    Stick with
    My pick for the sector to overweight in your
    portfolio? Semiconductors. Chip stocks. San Jose sand. I
    think these stocks are likely to move up in any
    technology rally that we get after the Federal Reserve stops
    raising interest rates. And these stocks are likely to
    get a boost from a "flight to earnings growth,"
    assuming that signs of a slowdown in economic growth get
    clearer and more nontechnology companies go down the
    trail that Procter & Gamble (PG, news, msgs) has blazed
    with its recent warnings of no growth.

    semiconductors in particular? I like the evidence of
    accelerating growth that's come in lately from multiple,
    independent sources.

    First, there's the news from the
    Semiconductor Industry Association. Monthly sales in April
    (based on a three-month moving average) were 1.4% higher
    than monthly sales in March. That confirms the
    forecasts from market watchers Dataquest, of 31% growth for
    2000 (over 1999), and from IC Insights, of 32% growth.
    Those were both solid hikes from forecasts earlier in
    2000 that growth would be in the vicinity of 18% to

    Second, there's the news from the semiconductor firms
    themselves. Motorola (MOT, news, msgs), a company with
    products in almost every chip segment, has reported that
    it sees continued strong growth for the rest of the
    year. Texas Instruments (TXN, news, msgs), a bellwether
    in communications and wireless chips, recently told
    analysts to raise their growth forecasts for that
    company's current quarter.

    But what semiconductor
    stocks in particular? Just as growth in the economy as a
    whole is an average of hot and cold sectors, so some
    segments of the chip market are hotter than others. For
    example, sales for the chips that go into computers are
    forecast to grow by somewhere around 15% to 20% this year.
    That's a rate of growth that most of the economy would
    kill for. But it's significantly lower than the 70%
    growth forecast for programmable communications
    processors -- a category that includes the chips that go
    into networks. Or the 40% growth forecast for the
    chips that go into wireless-phone handsets. Or the 35%
    growth forecast for embedded processors. Or the 25%
    growth forecast for digital signal

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