Are Managers Warming To Stone-Cold Chips? Analysts see signs pointing to better sales comparisons in the autumn.(B)

By Joanne Legomsky

Investor's Business Daily

The weak economy has dragged down the semiconductor industry, but some market pros say it may be time to get your feet wet with chip stocks.

"I'm telling people to move from an underweight to a market weight position," said Jack Geraghty, an analyst who covers the industry for Gerard, Klauer Mattison.

That would be a tough move. The price performance rating of the chipmaking sector has languished in the last three months, kicking around at a lowly 190-194. (See IBD's Industry Prices table on A21.) Chip-gear makers have clawedtheir way up to No. 148.

Geraghty stopped short of saying a turnaround was imminent, but he thought the stage was being set for the next move up.

In the five cyclical downturns since the early 1980s, every time industry revenues declined for three straight quarters they rose in the following quarter, he said. A revenue fall in the second quarter, which Geraghty termed likely, would mark the third decline in a row for this cycle.