Rob Black's Tech Stock Report

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Includes: AMAT, CSCO, IBM, INTC, NT, SPSN
by: Rob Black

International Business Machines (NYSE:IBM) built a semiconductor that runs 250 times faster than the average cell phone chip. IBM researchers, working with the Georgia Institute of Technology, reached 500 gigahertz by freezing chips to 451 degrees below zero Fahrenheit, a temperature that occurs naturally only in outer space. The chips may be used in business and defense systems. At room temperature, the semiconductors operate at 350 gigahertz. Computer simulations suggest the chips, which are made of silicon and germanium on a 200-millimeter wafer, have the potential to work even faster than 500 gigahertz at room temperature.

Spansion (SPSN) boosted its second-quarter revenue target to a range of $605 million to $635 million, up from its prior view of $590 million to $620 million. Spansion raised its forecast due to worldwide demand for its NOR flash memory chips used in cell phones and other consumer electronics.

Intel (NASDAQ:INTC), the biggest computer-chip maker, was upgraded to "favorable'' at Prudential Equity Group, who noted that the ratio of stock prices to forecast earnings has gotten smaller while memory chips remain "a strong pillar of capital spending.'' Prudential also boosted the rating on Applied Materials (NASDAQ:AMAT), the biggest maker of chip-production equipment, to "overweight''.

As Nokia (NYSE:NOK) and Siemens (SI) announced plans to merge— the third major industry deal in less than a year — the big question is who is next. Many analysts expect Motorola (MOT) and Huawei of China to pursue Nortel (NT), which is widely viewed as the most valuable but also the most financially troubled. Whatever combination emerges, the logic behind the deals is not unlike the thinking that drove Ericsson to buy Marconi or Alcatel and Lucent : As carriers like AT&T, Verizon and Sprint-Nextel turn into one-stop communications providers, equipment vendors must expand if they hope to continue serving them. They must be able to integrate wireless and traditional networks so customers can, say, check their e-mail on their cellphones and have single voice mail accounts serving a variety of phones. Only the strong will survive. Don’t forget Cisco (NASDAQ:CSCO), which bought Scientific-Atlanta, a leading maker of television set-top boxes. The deal gave Cisco access to cable companies, which are building networks that compete head-to-head with those of big telecommunications companies.

Sony Ericsson said it was keeping to its 2006 sales forecast of over 900 mln units for the global handset market, but suggested an upside to the forecast was possible.