Sector Wrap: Chips Get Dramatic Boost
Monday September 11, 5:14 pm ET
Semiconductor Stocks Sail on Bullish Predictions for Memory Makers
NEW YORK (AP) -- There was no stopping semiconductor stocks, which surged in afternoon trading on Monday after a slew of analysts predicted good things for computer memory chip makers.
While a handful of flash memory stocks surged on Monday, the biggest mover in the sector by far was Freescale Semiconductor Inc., which confirmed it was in talks for a possible "business transaction," just hours after the New York Times reported it could be in talks with a consortium of investment firms for a leveraged buyout.
At least one analyst -- Deutsche Bank's Ross Seymore -- said if the reported $16 billion deal did occur, which would value Freescale at roughly $39 per share, it could be "favorable for investors."
Shares of Freescale, which had traded between $20.87 and $33.04 over the last year, closed up $6.31, or 20.5 percent, at $37.06, on the New York Stock Exchange. Earlier in the session, shares set a new 52-week high of $37.18.
Although Freescale rumors took center stage, Micron Technology Inc. shares jumped after a JPMorgan analyst upgraded the stock and said the Boise, Idaho, company could benefit from improved dynamic random access memory prices.
"Our checks indicate DRAM memory pricing continues to improve during the third quarter of 2006, ahead of our expectations for roughly flattish pricing," wrote JPMorgan analyst Shawn Webster in a note to clients.
Webster upgraded the stock to "Overweight" from "Neutral."
Shares of Micron closed up 69 cents, or 3.9 percent, at $18.57 in Monday trading on the NYSE.
Another maker of flash memory, SanDisk Corp., rose more modestly on Monday after W.R. Hambrecht analyst Daniel Amir speculated the Sunnydale, Calif., company could benefit from increased flash memory orders from Apple Computer Inc., which he expects to roll out higher density iPod models.
"Our checks indicate a significant build roadmap for Apple in the next few months which will result in major NAND flash ordering," Amir wrote in a note to clients. "We anticipate that this build is to result in a tightening of the NAND flash market in late September or early October and will result in NAND flash pricing to increase slightly in the fourth quarter."
Shares of SanDisk closed up 22 cents, at $56.72, on the Nasdaq.
Spansion Inc., a joint venture between chip maker Advanced Micro Devices Inc. and Japan's Fujitsu, closed up 66 cents, or 4 percent, at $17.10 in Monday's trading after UBS analyst Alex Gauna said he believed the company could be winning market share, helped in part by increased business from mobile phone maker Motorola Inc.
"We believe Spansion continues to gain share on Intel Corp. with the most significant new opportunities arising in Motorola handsets," Gauna wrote in a note to clients.
The Philadelphia Semiconductor Sector Index closed up 2.4 percent, climbing to 10.34 points to a 449.03 close on Monday.
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