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Salomon Cuts 2001 Targets on Semiconductor Equipment Industry

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Salomon Smith Barney

lowered its 2001 growth outlook for the semiconductor equipment industry and warned that the bad news coming out of the sector is only in its early stages.

The research firm cut its forecast to a decline of 5% to 10% from expected growth of 7% to 10% in 2001, with downside risk of a 15% decline.

Salomon said "prices are right but timing is not," and that it believes an additional 15% to 20% decline in large-cap names like

Applied Materials

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is possible. However, the firm also said Applied's bookings could reaccelerate in mid-2001.

In addition, Salomon said it expects

Novellus Systems


, which will give mid-quarter guidance on Dec.1, to lower bookings and earnings expectations, amid push-outs of front-end equipment orders from major chipmakers in November.

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Shares of Applied Materials were recently down 3.1%, or $1.31, to $41.50, while Novellus fell 8.4%, or $2.44, to $26.75, in trading on the



Salomon said it favors the stocks of established small-cap equipment names, including

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Lam Research

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Credence Systems


. Salomon indicated that





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(ENTG) - Get Entegris, Inc. Report

"are also attractive at current levels."

Shares of these companies weren't spared in today's trading. Lam Research was lately down 4.8%, or 75 cents, to $14.75, and Credence tumbled 3.2%, or 63 cents, to $18.94. ATMI fell 5.1%, or 81 cents, to $15.25. Axcelis fell 10.6%, or 75 cents, to $6.38, while Entegris was down 5.1%, or 38 cents, to $7, on the Nasdaq.