Samsung didn't provide color on the quarterly outlook, but the selloff in the LED stocks had already explained the better-late-than-never report from Samsung on Thursday. Analysts covering the electronics sector say sales data coming out of Taiwan for September previous to the Samsung and AU Optronics reports already were indicating that the short-term bear argument against these stocks was well-founded, and the Samsung and AU Optronics are corroborating what has already been assumed.
"When Samsung is saying things are weak it usually has an impact on the industry -- however, in this case, everyone knew, so the question really turns to when things will get better," said Andy Abrams, analyst at Avian Securities.
Abrams said a good portion of the negative news is already built into the equipment players like Veeco and Aixtron, but with the slowdown beginning to show itself in the panel manufacturers and chip makers, the issue is Samsung talking about things not getting better until early next year. "I'm not as negative on the stocks as much as I don't see upside, and they could languish until the beginning of next year."
A second LED stock analyst concurred, saying, "I think if anything the Samsung comments just cast doubt about the timing of the recovery and the depth of the pullback in third quarter. "Everyone knew the third quarter was tough and demand did not come back in September, but when do things snap back?"
For investors interested in the LED stock space, then, the lack of a reaction to the latest bad news from the consumer electronics players places the ball squarely in the upcoming earnings court, with Cree set to report on Oct. 19. Veeco follows on the Oct. 25. How they answer the question about the snapback, respective to their own business niches, may be the difference between an earnings positive or negative catalyst.
LED stock sector earnings preview will be published next Thursday, Oct. 14..
--Written by Eric Rosenbaum in New York.
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