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A CHIPMAKER BACK IN THE CHIPSAt least four big value investors have been accumulating stakes--about 4% each--in Alliance Semiconductors (ALSC), whose stock has been on the skids for quite a while. No, the company isn't a takeover play. So why are these pros buying? ''It's a plain-and-simple turnaround story,'' says one hedge-fund manager. He notes that Alliance, which makes memory chips and memory-intensive logic products, has been hurt by falling prices due to overcapacity. But there is talk lately that Korean chipmakers, who control 35% of the market, will curtail their output to bolster prices. This has helped boost the shares of U.S. chipmakers Micron Technology and Texas Instruments. But so far, not of Alliance, which also stands to benefit. ''The snapback in chip prices will surely kick up Alliance's earnings,'' says one money runner. Most analysts believe that Alliance, which posted earnings of 26 cents a share in 1996, will be in the red in 1997. The bulls, however, point to 1998: Some analysts predict 12 cents to 35 cents a share. But the four money managers are more optimistic. They see Alliance making ''at least 50 cents'' next year. They foresee a surge in sales of chips for business applications; Alliance markets most of its products to the desktop, portable-computing, and networking markets. As a result, they expect the stock to double in 12 months.
BY GENE G. MARCIAL
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Updated June 15, 1997 by bwwebmaster
Copyright 1997, by The McGraw-Hill Companies Inc. All rights reserved.
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