Chip/Semiconductors Trading Down After Xilinx & National Semi (Watch the Charts)

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Stock Tickers: XLNX, NSM, SMH, XSD, ALTR, NVLS, INTC, AMD

Perhaps the easiest way to measure the Semiconductor stocks as a whole is by evaluating the Semiconductor HOLDRs (SMH) and the SPRD Semiconductor (XSD).

These two trade usually within 1% or so of each other, although there are times spread out where one does better than the other as the components have a different mix.  But if you average these out on any given day you should have a good idea of the performance of chips as a whole.

Tonight they are both down.  SMH is down in after-hours activity by 1.65% at $33.88, and that is after being down 1.2% at $34.45 in regular trading. XSD is indicated down but there has been no volume as it is much thinner, but it closed down 1.7% at $50.25 in normal trading today.  The concern here on both SMH & XSD is that both are getting right around their respective 50-day and 200-day moving averages, and they are converging.  Technicians look for that, so we are at some levels where the technicians could start rattling their sabres about the charts.

The reason these are lower is because of Xilinx (XLNX) lowering their forecasts in the mid-quarter update and because of National Semiconductor (NSM) showing a fall in profits.

Xilinx (XLNX) fell 2% in regular trading to $26.44, but shares are down more than 4.5% to $25.21 in after-hours activity.  The company put quarterly revenues at $458 million to $472.5 million (compared to $482 million estimates), and it sees gross margin at 61-62%.

National Semi (NSM) fell 3.5% to $23.92 in normal trading but shares are down another 1.5% to $23.55 in after-hours trading.  NSM posted earnings of $0.27 on EPS as expected, and revenues were $501.6 million (compared to $501.5M est.).  Unfortunately the company said bookings were down some 16% and gross margin was down 2.4% to 58.9%.  It forecast a sequential revenue drop of 8% to 11% with slightly lower margin again.  That revenue number would be at least $35 million short of the $495 million expected, and it could be as much as $50 million light.

Earlier this week Altera (ALTR) fell marginally after lowering its target, and it is often compared as the immediate comparable stock as XLNX.  ALTR shares fell 2.3% to $19.74 in normal trading, and its shares are at $19.60 in after-hours activity.  Novellus (NVLS) gave a decent mid-quarter update earlier in the week, but fell after Goldman Sachs cut it to a "Sell" rating; NVLS closed down 1.1% at $32.51 in regular trading, and shares are down another $0.06 at $32.45 in after-hours activity.

Now we just have to wonder who else is going to come clean.  So far we have no word out of Intel (INTC) nor out of Advanced Micro Devices (AMD).  INTC closed down 1.2% at $20.65 in normal trading and are only down $0.01 more in after-hours trading.  AMD closed down 2% at $21.05 in regular trading and are down $0.04 after-hours.

Jon C. Ogg
December 7, 2006