Ralph
09.01.2001, 22:21
Pulse: Nokia's Slowing Cell Phone Sales Rock Some Chipmakers
By John Raess
Staff Reporter
1/9/01 2:30 PM ET
Nokia's (NOK:NYSE - news) call on slower fourth-quarter cell phone growth was rocking the shares of semiconductor companies active in the booming wireless handset market. And it carries a faint echo of last summer, when unhappy tidings from wireless makers reached out and touched semiconductors.
There is a close relationship: Semiconductors play an integral role in cell phones, from storing numbers to analyzing and digitizing the sound waves.
No semi company plays a bigger role in the market than Texas Instruments (TXN:NYSE - news), which makes a sizable number of the chips inside cell phones that translate digital signals to analog and vice versa.
Investors' jitters over lowering cell phone sales took TI's stock down 18% during the period from late July to early August after a series of comments by three top cell phone makers: Nokia, Motorola (MOT:NYSE - news)and Ericsson (ERICY:Nasdaq - news). Today TI's stock again was paying for that closeness, this morning, trading off $2.69, or 5.7%, to $44.31.
So was RF Microdevices (RFMD:Nasdaq - news), which derives the bulk of its revenue from semiconductors for wireless phones. Its stock was trading down $1.42, or 6%, to $22.43.
Chipmaker Atmel (ATML:Nasdaq - news), which makes flash memory chips and other wireless phone components, counts Nokia, Ericsson and Motorola as some of its biggest customers. In recent trading Atmel was off 1.7%. Atmel also lost ground during the summer slump, losing more than 23% of its value in late July and early August.
There may be some overkill in the market reaction, said Terry O'Brien of Branch, Cabell. Nokia's report that it missed estimates by a few million phones doesn't necessarily herald a slowdown in worldwide cell phone demand, he added.
"Here they are saying they're off by a few million phones. But at the end of the month when they report their earnings, if they say instead of 45% growth we're going to be at 20%, that would be significant," O'Brien said. His company has not done recent underwriting for the firms mentioned.
Other makers of flash memory, which stores data after the device's power is off, were not suffering, largely because the market for the chips has expanded beyond cell phones, O'Brien said. Among them, Advanced Micro Devices (AMD: - news) was up 3.1% in recent trading. Industry giant Intel (INTC:Nasdaq - news), which recently launched a new digital signal processor aimed at the cell phone market with partner Analog Devices (ADI:NYSE - news), also sells flash. In recent trading Intel was up 43 cents, or 1.4%, to $32.37.
Analog Devices, which also sells chips to European cell phone manufacturer Siemens, was trading down 0.1%.
Source: TheStreet.com
***********************************************************
Ralph
By John Raess
Staff Reporter
1/9/01 2:30 PM ET
Nokia's (NOK:NYSE - news) call on slower fourth-quarter cell phone growth was rocking the shares of semiconductor companies active in the booming wireless handset market. And it carries a faint echo of last summer, when unhappy tidings from wireless makers reached out and touched semiconductors.
There is a close relationship: Semiconductors play an integral role in cell phones, from storing numbers to analyzing and digitizing the sound waves.
No semi company plays a bigger role in the market than Texas Instruments (TXN:NYSE - news), which makes a sizable number of the chips inside cell phones that translate digital signals to analog and vice versa.
Investors' jitters over lowering cell phone sales took TI's stock down 18% during the period from late July to early August after a series of comments by three top cell phone makers: Nokia, Motorola (MOT:NYSE - news)and Ericsson (ERICY:Nasdaq - news). Today TI's stock again was paying for that closeness, this morning, trading off $2.69, or 5.7%, to $44.31.
So was RF Microdevices (RFMD:Nasdaq - news), which derives the bulk of its revenue from semiconductors for wireless phones. Its stock was trading down $1.42, or 6%, to $22.43.
Chipmaker Atmel (ATML:Nasdaq - news), which makes flash memory chips and other wireless phone components, counts Nokia, Ericsson and Motorola as some of its biggest customers. In recent trading Atmel was off 1.7%. Atmel also lost ground during the summer slump, losing more than 23% of its value in late July and early August.
There may be some overkill in the market reaction, said Terry O'Brien of Branch, Cabell. Nokia's report that it missed estimates by a few million phones doesn't necessarily herald a slowdown in worldwide cell phone demand, he added.
"Here they are saying they're off by a few million phones. But at the end of the month when they report their earnings, if they say instead of 45% growth we're going to be at 20%, that would be significant," O'Brien said. His company has not done recent underwriting for the firms mentioned.
Other makers of flash memory, which stores data after the device's power is off, were not suffering, largely because the market for the chips has expanded beyond cell phones, O'Brien said. Among them, Advanced Micro Devices (AMD: - news) was up 3.1% in recent trading. Industry giant Intel (INTC:Nasdaq - news), which recently launched a new digital signal processor aimed at the cell phone market with partner Analog Devices (ADI:NYSE - news), also sells flash. In recent trading Intel was up 43 cents, or 1.4%, to $32.37.
Analog Devices, which also sells chips to European cell phone manufacturer Siemens, was trading down 0.1%.
Source: TheStreet.com
***********************************************************
Ralph