S&P Say Chipmakers Will Slow

It was reported in Barrons on Friday that S&P had downgraded some technology stocks. S&P gave further insight in today’s Aug 18, Morning Brief, concerning semiconductor stocks. Basically, they believe that the 29% sales growth projected for this year will not continue next year. Here are some quotes from this morning's report: “Standard & Poor's Equity Research Services (ERS) has a neutral 12-month fundamental outlook for the semiconductor industry. Industry revenues, after dropping with the broader economy during the recession, have staged an impressive comeback that continues today." "Results from the recent second quarter have continued the trend of beating Wall Street's projections” "S&P's semiconductor equity analyst Clyde Montevirgen still believes that by the year's end, the industry will have achieved 29% sales growth and posted record sales levels. However, Montevirgen also believes nothing good lasts forever. He does not think this fast rate of expansion is sustainable, and believes that chipmakers are approaching a temporary peak of an industry cycle. He expects growth to continue at a more measured pace in coming quarters.” "Montevirgen believes the inventory replenishment cycle that has been one of the biggest drivers for fast revenue growth is largely over; and now it is dependant on macro factors, such as economic conditions, to support top-line advances, in his opinion.”