Tower Semiconductors

(Nasdaq:TSEM) shares jumped 13% on Wall Street just before the company released its results for the first quarter of 2001. The bounce may have been due to happy anticipation of excellent results despite the crisis pervading the semiconductor industry.

But this morning it becomes apparent that Tower is not coming through the crisis unscathed.

The company, whose biggest shareholder is the Tel Aviv Stock Exchange-traded Israel Corporation, slipped back into the red after a single quarter in the positive zone.

Tower also saw its first quarter revenues slide 5% against the parallel and 28% against the fourth quarter of 2000 to $21.1 million.

It lost a net $7.1 million in the first quarter of 2001, or 45 cents per share. This sum includes $1.5 million for Fab2, its second facility being built in Migdal Haemek.

Excluding the $1.5 million of non-capitalized Fab 2 expenses, Tower's net loss was $5.6 million, or 36 cents per share.

In the first quarter of 2000, a year ago, Tower lost $3.9 million. In the fourth quarter of 2000 it netted a positive $300,000.

As if that weren't enough, Tower warns investors to lower their sights for the second quarter.

"Our first quarter results reflect the semiconductor cyclical downswing, similarly to other foundries," stated Dr. Yoav Nissan-Cohen, Tower's co-chief executive officer. "The global semiconductor industry slowdown now appears to be quite pervasive. Consequently, we expect a sequential decline of approximately 30% in revenues in the second quarter," he warned.

Nissan-Cohen said that progress on Fab2 is satisfactory. He added that the fab is expected to generate much of Tower's future growth.

Tower has so far received $126 million from strategic partners for Fab2, after meeting several milestones. Tower is yet to receive $250 million from the state and another $550 million as bank loans for the fab. Altogether the cost of building the facility will come to some $1.6 billion.