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We blogged late last fall about semiconductor stocks fundamentals rolling over. It appears semi management is beginning to whisper more and more of moderating results to analysts:- Lehman cuts Micron Technology Inc's (NYSE: MU) estimates and sees losses for the next three quarters. The increase in demand for memory chips due to Microsoft Corporation's (NASDAQ: MSFT) Vista demanding more memory is not happening.
- Pacific Crest Securities wrote second quarter chip demand is underwhelming, with notebooks and the Nintendo (OTC: NTDOY) Wii the only bright spots.
- J.P. Morgan wrote consensus expectations for both the second quarter and all of 2007 are too high and is trimming estimates, The more significant earnings misses could come from Advanced Micro Devices Inc (NYSE: AMD), Cypress Semiconductor Corporation (NYSE: CY), Intel Corporation (NASDAQ: INTC) and On Semiconductor Corporation (NASDAQ: ONNN); with smaller cuts for Texas Instrments Inc (NYSE: TXN), Broadcom Corporation (NASDAQ: BRCM), Altera Corporation (NASDAQ: ALTR), Xilinx Inc (NASDAQ: XLNX) and Fairchild Semiconductor International (NYSE: FCS).
The other major points we have been making is that we are entering the seasonally weak period for these stocks. So be cautious about jumping in with both feet in the early Spring.
Most likely, the two drivers for these stocks is the Fed lowering rates or the typically seasonal pick up which occurs in late summer. Since the Fed is on hold, there appears to be no need to jump into these stocks yet. Let the bad news hit these stocks and then start bottom fishing.
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