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Gotta Have 'Em

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Vishay Intertechnology (VSH) makes and markets electronic components. Unlike most firms attracting attention in this field, Vishay concentrates on passive components (parts like resistors, which have no semiconductors or amplification), and discrete semiconductors.

These are relatively stodgy, low-tech devices, but they are crucial parts in the growing market for modern electronic equipment. (As are, for example, the low-voltage DC power supplies found in all computers and electronic equipment.) Many of these are discrete components.

And just what is a “discrete” component? Simply put, it’s a simple device, such as a single transistor, usually with two or three wire leads, as opposed to an integrated circuit (IC), which may contain many such devices in tiny form and many connectors. Discrete semiconductors can generally carry more power because they are larger, while tiny IC devices generally work with just enough electricity to allow certain information to be carried. Discrete components are commonly found in power supplies, analog (especially audio) circuits, radio amplifiers (e.g., in cell phones) and other communications devices. They’re meant for just about any application whose production volumes are too small to justify an IC design.

Far from a flash in the pan, Vishay, based in Malvern, Pennsylvania, was founded in 1962 by Dr. Felix Zandman. Now 72, he stepped down as president of the company in 1998 (nice timing!), but he’s still chairman and CEO. Dr. Gerald Paul, 52, has been the firm’s president since 1998 and COO since 1996. He joined Vishay Europe in 1978, and became a Vishay vice president in 1993. You can click into the firm’s Web site,, for more information on its history.

Vishay does sell some integrated circuits, albeit much simpler ones than the microprocessors and other chips whose design is driving the computer and digital communications revolution. (Vishay’s integrated circuits tend to have a few relatively large and powerful transistors, and thus fill a niche between discrete components and complex ICs.)

Its products include (in approximate order of increasing complexity): connectors, resistors and capacitors (some discrete, and some arrayed in group packages), magnetics (inductors and transformers), diodes and rectifiers, and other transistors, optoelectronics, analog switches, frequency control integrated modules, and power ICs (for power conversion, power management, motor control, or bus interface). Got it? Good. The aforementioned components are not only the map of Vishay’s market, they’re the map of the market from which Vishay is well positioned to glean significant profits.

With a stock price below seven times trailing earnings (and below 11 times 2001 estimates), this stock pulls on the heart- strings of value investors seeking a cheap stock in a real company with real market share and real products. Of course, cheap doesn’t make it good. But, while many of the firm’s products are arguably in a price-driven commodity business, others (e.g., optoelectronics) are newer or more specialized.

And even for the most low-tech or discrete devices, there’s a “technology” aspect that comes from designing improvements in manufacturing and pricing and/or miniaturization, while handling higher power, frequencies, and temperatures. So, in this case, cheap makes Vishay look downright attractive. At a recent price of $24.79, and 138 million shares outstanding, Vishay has a $3.4 billion market cap, and the stock is between its 52-week high of $62.66 and low of $13.75. Striking while the market is cold could net you a solid gain in a low-tech company that is a necessary part of the new economy


Healing Touch

While there may be no balm in Gilead (GILD), this biotech pick could offer healthy returns

T rue, there are many biotech companies to choose from, but there are few you will want to own for more than a short-term gain. Gilead looks like it’s positioned for long-term growth. Gilead does not make “me, too” drugs driven more by marketing need than medical need, and Gilead has no “lifestyle” drugs aimed at making basically healthy people happier with the thickness of their hair or the smoothness of their skin. Instead, Gilead is focused on necessary treatments for global diseases.

Gilead’s name derives from a region in the Middle East long recognized as the source of a healing compound known as the “balm of Gilead.” More recently, according to, plants indigenous to this area have been associated with the analgesic properties of aspirin. (The site also describes the company’s history, which began in 1987. Its adventures in venture capital, partnerships, and new drugs and trials will give you, in microcosm, a useful perspective on the biotech industry.) In the latest news, on April 26, 2001, Gilead announced its results of operations for the first quarter ended March 31, 2001: Net product sales of $45.1 million, royalty revenues of $6.2 million, and contract revenues of $6.6 million totaled $57.8 million in revenues, up 21% over the same quarter in 2000.

The firm treats potentially fatal infectious diseases such as HIV/AIDS, complications of AIDS, hepatitis B, and cancer. It also has a novel treatment for the flu, a disease which many equate with harmless colds, but which has historically killed millions, and is still a very dangerous illness.

One advantage the company benefits from is the “Fast Track” designation the FDA can offer for drugs that “address an unmet medical need for a serious or life-threatening condition.” This designation was given, for example, to Gilead’s tenofovir DF treatment for HIV infection. That drug is a reverse transcriptase inhibitor. There are several on the market, but given HIV’s growing ability to resist many older drugs, and given the new drug’s once-a-day pill form, it certainly addresses unmet needs. Gilead hopes to introduce the drug by the end of 2001.

However, there are political pressures that investors in any pharmaceutical sector need to account for. Since 1993, the pharmaceuticals industry has rightly been seen as a politically risky sector in the U.S. and abroad. Crucial drugs for AIDS may be the riskiest from an investment standpoint, given activists’ views on socializing the pharmaceuticals industry to provide cheap drugs. The high-risk business of developing novel drugs demands high profits if investments in the area are to continue. It’s a Catch-22 for which Gilead may not be able to answer with one drug–but can make up for with others.

Some of Gilead’s drugs are based on existing pharmaceuticals. For example, its injectable drug AmBisome is a reformulation of the existing drug amphotericin B, for the treatment of various fungal or parasitic infections. Gilead’s version differs in that the drug is contained within liposomes. These tiny spheres, made out of the same sort of chemicals (lipids) as the walls of human cells, act like little cold capsules, lasting much longer in the human system and/or delivering more drug to target tissues than could the uncapsuled drug. This is not a trivial benefit; it can reduce toxicity, and can save lives when applied to injected drugs or drugs used as part of a complex combination, as is often the case with HIV infection. And while owning Gilead won’t be the cure-all for biotechnology investors, it’s positioned to last longer than most.

Gilead, with 94 million shares outstanding, a $4.8 billion market cap, and 850 employees, is a mid-cap biotechnology player with a necessary edge. The stock’s price, dulled during the first quarter selloff, has recuperated–but the longer-term prognosis for a healthy life beyond this year’s pale drew me to it. The 52-week high is $59.06. The 52-week low is $24.37.


Go Wireless

Intersil (ISIL) shelves the automotive electronics market to equip your cell phone instead

No debt, wired for profit, but with a P/E that could give you a moderate nosebleed, Intersil makes semiconductors and software for wired and wireless communications, including integrated digital and analog networks. In addition, the firm’s Endura power management circuits are used with nearly one-third of the world’s Intel Pentium processors, and half of the world’s AMD Athlon processors. Such power management devices are particularly useful in laptops, where lightweight batteries and more powerful microprocessors mean battery run times are increasingly critical factors in engineering design.

In March, Intersil announced that it was moving out of most automotive and industrial electronics markets (most notably, selling its discrete power chip business to Fairchild Semiconductor for $338 million in cash, a move which left Intersil with no debt and $600 million in cash) to emphasize its higher-growth and higher-margin communications and networking areas. Of particular promise is the prospect of wireless network cards soon becoming a commonly chosen option for new laptop PCs.

The sale of the discrete power business completed Intersil’s transition to a communications company, plugging into wireless access and the communications analog markets. For the first quarter of 2001, Intersil posted earnings of $0.07 per share, ahead of the last consensus estimates (earlier massaged downward by Intersil, from $0.20 to $0.05). The company expects a second-quarter revenue decline of 5% to 8%, but expects to again earn $0.07 per share in the second quarter due to cost cutting.

Intersil is based in Irvine, California, and has manufacturing facilities in Palm Bay, Florida. (It’s closing its Findlay, Ohio plant as part of its move out of more industrial sectors.) As always, you can click through to for the relevant numbers.

Intersil looks like the new kid on the block, but was basically spun off from Harris Corporation in August 1999. The new firm was sold Harris’s semiconductor businesses, as Harris wanted to focus exclusively on communications equipment. Intersil was then owned by affiliates of Citicorp Venture Capital, Credit Suisse First Boston, individual investors, and Harris itself. Most of Intersil’s top management also came from Harris, led by Gregory L. Williams, previously president of Harris’s Semiconductor Sector.

On February 24, 2000, Intersil had its initial public offering at a price of $25. The offering raised $500 million. (As of December 2000, institutions owned 40% of the firm’s shares; most notably, FMR owned 9.3% of the firm, and Janus Capital owned 7.2%.) Intersil has a $3.5 billion market cap; its 52-week high is $67.31, while its low is $13.56. The firm recently traded at $34, which is 86 times the consensus estimate ($0.38) for 2001 earnings.

Web Site of the Month

The Market In Brief

In lieu of market news, offers up-to-the-minute analysis instead

I n brief, for 25 bucks per month, is an excellent site–well designed, conceived, and executed. It complements,, and, and differs from them in two ways. First, delivers market analysis, not news, in the form of professional opinions. Secondly, the site is updated in real time. The site’s subscription stock analysis service alone is updated more than 500 times per day.

“Let me define how we see the difference between market analysis and news,” says David Beasley, senior vice president of marketing and business development. “A good news source, such as Reuters, provides objective reporting, often calling on several outside sources to supply expert opinions for any given news story. The role of a news analysis source like, on the other hand, is to sift through the myriad sources of market information available–including news feeds, market contacts, and other sources–and provide investors with our own expert market opinion about what circumstances are driving a particular market and what we expect to happen next.” Fair enough. The site is true to his words–even if the expert opinions are, after all, just that. has provided the most professional real-time market analysis on the Internet for over six years. But while that makes it an old dog in e-years, it is still able to learn and earn new clicks. As you know, I like knowing all about a company’s past in order to gain insight into its present and future prospects. originated from a firm called MMS International, which began online distribution in Belmont, California in 1977. MMS was launched to address the perceived need for live market analysis in key markets around the world. Initially MMS addressed the bond and international foreign exchange markets for professional traders on the Telerate network (later Dow Jones Telerate and now Bridge Telerate).

The Telerate distribution was very successful. Heading into the mid-80′s, distribution of the content spread to the Reuters and Bloomberg networks and was successful through those pipelines as well.

In 1989, MMS was sold to the Standard and Poor’s division of McGraw-Hill. By the time of the sale to McGraw-Hill/S&P, MMS had 14 analytical offices in money centers around the world covering 14 global markets with virtually every major international bank and brokerage firm associated with bond and foreign exchange trading as clients. When the Internet exploded in 1994 and 1995, the former longtime president of MMS, Dick Green, leveled the playing field for private investors by offering over the Web the same type of “real-time” analysis MMS offered but at a more affordable price. was born.

The advantages of over traditional sources for interconnecting advisors, information sources, and actionable investment advice and insights are tangible. “The vision of is to be the leading Internet provider of live market analysis for U.S. stock, U.S. bond, and world FX market participants,” proclaims Beasley. Colonizing the Internet offered the folks at the ability to provide professional opinions on an instantaneous basis for both investors and market professionals at a reasonable price without short-selling content for the sake of form. does have a free area that provides updating capacity as an alternative to the subscription services–but you get what you pay for. Or, more correctly, you won’t know what you’re missing, which could be a costly mistake. The subscription section contains more features, such as rich content archives, live headlines, alerts, BriefingSearch, and more extensive content. Within the subscription arena, there’s the Stock Analysis product ($9.95 per month), but there’s also another step up, called the Professional service ($25 per month). If you only look at stocks, you may not need the Professional service, which contains both Live Bond and Live Stock analysis. Of course, if you only looked at stocks in 2000, you may be spending most of your time looking for clients in 2001. But in any case, free trials are available for both subscription services. is daily market source for professionals who need to be able to respond to client questions in an up-to-the-minute manner. I click through several times a trading day to view the market’s multifaceted landscape through more than my own lenses.

Under “Stock Analysis,” you can review live headlines, “Stock-Ticker,” “In Play,” and “Story Stocks.” “In Play” is written by Damon Southward, who appears regularly on TechTV’s “Tech Live” show. While TechTV was old hat the day it went live, Southward’s commentaries can help plug you in to the pulse of the markets. Another section, “Tech Stocks,” is written by Bob Walberg, who appears regularly on CNNfn’s the “N.E.W. Show” and CNBC. Other items include “Bond Ticker,” “Rate Brief,” and the “Economic Calendar,” which you’ll find listed under “Professional” at the bottom of the screen.

Is wireless, or heading there? “Certain subsets of information are currently available on a wireless basis through E*Trade,” says Beasley. “We haven’t seen significant demand at this point from our reader base for wireless distribution but are closely monitoring the situation. If that changes, we’ll respond.”

When asked to discuss the feature or area he liked most, Beasley responds that his “current favorite part of Briefing is a new page called Live Headlines. I like it because you can be anywhere on the Briefing subscriber site and receive audio or visual alerts of updates to your favorite Briefing content when they occur.” Fair enough, again. For starters, the page itself offers live updates of popular content in real-time–you no longer need to refresh a page to get the latest comments. Headlines will be updated on the headlines page when the stories are posted to the site.

Click on the speaker or eyeball icon in each section to receive audio and/or visual alerts for that section. Take note of another great feature–the Ticker Search box in the upper right corner of the “Live Headlines” page. In addition to offering quotes, charts, and other tools, this box can be used to “Search Today’s Site” and to search archives by page. These archive searches are powerful. Try typing in a ticker and selecting Archives > Live > Up/Downgrades.

But who is the competition? How has stayed ahead of them? How will they stay ahead? Beasley notes that people probably most often compare to But because of the live nature of its analysis (500+ updates per day) and professional opinion (analysis, not news), offers a different, complementary angle.

Defining leadership in this arena is one thing; maintaining leadership is another. “We successfully maintained the same type of leadership position for over 17 years with our previous online firm, MMS International,” says Beasley. Indeed, there’s no doubt that if history continues to repeat itself, will not only be around, but will serve a useful purpose for many years to come.

Accomplishing rapid coverage while maintaining strict editorial policies that ensure professional reporting and analysis is no easy task. We’ve all seen a hoax report or two by now, and a hoax report can be like a virus to a site like this–a virus that attacks and destroys its credibility.’s editorial policies are, as a result, relevant to subscribers. Among the litany: “All comments from trading floors must be heard from multiple, independent, credible sources before will post comments as to why stocks are moving. Analysts at are prohibited from trading stocks they write about, and the company takes no positions in the markets. Briefing does not profit from any trading activity.” That’s the objective of their subscribers–and the raison d’?tre for the site.

There is one last item that bears mentioning. is one of those rare “dot-coms” that has been profitable (for 12 consecutive quarters) and continues to be so.

Between its 22,000 direct subscribers and approximately 140 licensed content partnerships, is a rational choice for your next Internet investment.