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Smith Barney Cuts Chips to 'Underweight'


Smith Barney downgraded Agere Systems (AGR.A) to underperform, and cut the semiconductor industry rating to underweight.

Analyst Clark Westmont says he downgraded Agere as he expects revenue risk to both wireless local are network sales and hard disk drive sales, through market share loss and excess customer inventories.

He downgraded the industry because 1) customers' inventories have risen year to date, thereby temporarily inflating first quarter chip shipments above actual end-market demand; 2) there's evidence of recent end market deterioration in white box PCs and handsets; 3) valuations are already discounting published estimates; 4) chip orders ordinarily soften over the next four months, which typically weighs on the group.


The Aging of Abercrombie & Fitch
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