Markets & Finance

Prudential Cuts Oak Technology to 'Hold'


Prudential downgraded Oak Technology (OAKT) to hold from buy.

Analyst Randy Scherago says Oak Technology's management in recent investor meetings has given voice to concerns about continuted weakness in PCs, and delays in the release of Microsoft XP software, as well as the possibility of Oak's original equipment manufacturer customer base waiting for the release of 24X CD-RW chipsets in September. He notes management was responding to questions as to why they have not seen improvement in backlog visibility over the past few weeks.

Scherago interprets management's emphasis on poor visibility, and an unwillingness to discuss future EPS estimates as indications fiscal 2002 guidance could be revised. He cut the $0.35 fiscal 2002 (June) EPS estimate to $0.18. He also cut the $15 target to $11.


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