Prudential Cuts Genesis Micro Opinion

Analyst Tristan Gerra says the downgrade was based on the dismal pricing outlook for the company's main line of business

Prudential lowered its investment rating on Genesis Micro (GNSS ) to hold from buy.

Analyst Tristan Gerra says the downgrade was based on the dismal pricing outlook for the company's main line of business, integrated analog ICs in the 15-inch market. Gerra says that in his opinion, growth resides in the 17-inch panel market. He no longer thinks the company will be able to diversify in non-commodity businesses rapidly enough to offset market share losses and pricing erosion in its core business. Gerra says a recent report indicates flat panel display demand is now "price-constrained" rather than supply-constrained.He cut his $0.40 fiscal 2003 (ending March) EPS estimate to $0.26, and his $15 price target to $5.

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