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Industry News

RF to Light 100 Update: Stocks Are Cheap Now

August 14, 2006
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The RF to Light 100 dropped 1% last week, YTD now -1% at 2085. Stocks are cheap now: Average P/E ratio dropped to 30, sum of average P/E times P/B dropped to 69, historic lows since 2000. See chart for more perspective. Being in stage III of the market cycle, last week was a good example, for example, Cisco's stock rose 16% powered by healthy earnings, Analog Devices and Deutsche Telekom tanked because of disappointing earnings. Not an easy environment to pick winners. Fears over just when double digit earning growth will disappear plus inflation outlook and high oil prices keep investors cautious. July global economic expansion eased further from its April high while job growth gained momentum, but cost inflation remained at an elevated level.

In the News: The worldwide GaAs microelectronic device market, dominated by handset components, grew from $ 2.6 to $ 2.8 B (2004 + 2005)and will exceed $ 3 B this year. 3G handsets with multi-band requirements and increasingly complex switches make GaAs technology first choice (over silicon). Sprint Nextel to invest $ 3 B in 4G Wimax network. Rival (CommScope) bid launched for Andrew Corp. Juniper faces Nasdaq de-listing due to suspected options backdating. Executives leave Vitesse.

Market oversold indicator: up to 86%
Market overbought indicator: down to 32%

Top 5 - last week: Bookham (19%), ADC (16%), Cisco (13%), Vitesse (10%), Finisar (8%)
- YTD : Avici (94%), Sirenza (89%), Broadwing (66%), Hittite (61%), Finisar (50%)

Bottom 5 - last week: Analog Devices (-16%), Deutsche Telekom (-12%), Avici (-12%), Micrel (-10%), Amkor (-8%)
- YTD : Vitesse (-54%), Powerwave (-50%), HEI (-49%), Bookham (-48%),Juniper (-45%)

by Sectors:

Space & Defense: -2%, YTD + 7%
Communic. Services: -3%, YTD +14%
Network Systems: 0%, YTD -18%
RF Semiconductors: -2%, YTD - 8%
RF Components: 0%, YTD + 3%
F/O Components: -1%, YTD + 3%
Miscell: -1%, YTD - 3%
RF to Light 100: -1%, YTD - 1%

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