Sector Watch: Semis Trade Mostly Lower After Warning, Research Note

By Dan Bernstein ,

Another dose of negative news has the semiconductor sector headed for a down day, as a profit warning and a less-than-confident analyst's note left the majority of chipmakers trading lower.

Most of the sector lost ground by midday, as reflected in the

Philadelphia Stock Exchange Semiconductor Index

, or the SOX. The index slipped 2% by noon, while the

Dow Jones U.S. Semiconductor Index

fell 1.7%.

In a research note this morning,

Goldman Sachs

analyst Terry Ragsdale wrote that "the industry may be looking at another 20% decline seq. in 2Q. This tends to confirm that last week's preannouncements from

Altera

(ALTR) - Get Report

and

Integrated Device Technology

(IDTI) - Get Report

were not company-specific and implies a downward bias for semiconductor news flow and stock prices near term."

Altera lowered its revenue guidance last Thursday. The stock gained slightly Friday, but fell today, losing 1.9% to $24.67.

Xilinx

(XLNX) - Get Report

, a direct competitor of Altera, lost 1.6% today to $41.14.

Cypress Semiconductor

(CY) - Get Report

warned this morning that its second-quarter earnings would likely be between break-even and 2 cents a share. Analysts on average expect the company to earn 2 cents. The company also reduced its revenue expectations to a range of $175 million to $185 million, down from $262 million in the first quarter. In the same period last year, Cypress earned 50 cents a share on revenue of $300.1 million.

The stock edged higher today, gaining 1.7% to $21.97.

TheStreet.com's

Jim Cramer

examined in a

separate column why Cypress may be moving up.

Other stocks to the downside included

Advanced Micro Devices

(AMD) - Get Report

, which dropped 3.2% to $28.65. Microprocessor maker

Intel

(INTC) - Get Report

lost 1.7% to $28.25, while

Micron Technology

(MU) - Get Report

fell 1.9% to $38.47. Graphics-related chip producer

Nvidia

(NVDA) - Get Report

lost 1.9% to $88.80 today, and

Texas Instruments

(TXN) - Get Report

slipped 0.6% to $34.05.

In addition to the sector update from Goldman Sachs today, another of the firm's analysts put out a report on

Broadcom

(BRCM)

, lowering the company's estimates "to reflect our belief that the ongoing enterprise and cable market inventory corrections are likely to cause the company to miss our previous estimate of a 23% sequential decline."

Nathaniel Cohn reduced his forecast to a loss of 20 cents a share from a loss of 4 cents a share for fiscal 2001. The analyst also cut his projection for 2002 to a profit of 20 cents a share from 30 cents a share. But the stock traded higher, gaining 0.9% to $34.07.

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