High-tech sector gloom cuts value of Parthus shares

Shares in Dublin-based Parthus Technologies lost more than 7 per cent of their value in London yesterday, as gloom in the technology sector was coupled with negative analyst comment on the mobile device chip designer.

The fall, mirrored in intraday trading on Nasdaq, came on the same day as news that investment bank UBS Warburg had cut its price target on Parthus by more than 60 per cent. The target cut, from £1.20 sterling to 45p sterling, was greeted with some surprise on this side of the Irish Sea with Dublin brokers expressing their continued support of Parthus for the long term. The London market was less confident, however, with shares closing down 4p at 52.5p sterling. This compares with a high of 416p sterling in September last year. The UBS report, focusing on the semiconductor intellectual property sector as a whole, set Parthus against seven of its peers, and concluded that Parthus was the "most risky" of the eight. The finding was based on criteria including earnings visibility and positioning within the market, and referred to valuation rather than company fundamentals.

Parthus does not manufacture the chips it designs for mobile devices; the company positions itself instead on the high end of the semiconductor market, licensing its designs to industry. The UBS analysis concluded that revenue stream from such licences was likely to be uncertain in the short term, leading to a decreased market profile for the company. The 45p target was a "worst case scenario," one of the report's authors said yesterday, adding that the £1.20 target dated from technology stock highs of last year.

Parthus, which is due to issue results next week, has suffered through the technology pessimism of recent months, despite initial hopes that its niche market would be protected from the downturn. Irish brokers continue to take a positive view on Parthus stock. Mr John Coolican of Merrion Capital said yesterday that the long-term potential on Parthus was "enormous."

Although admitting that the current outlook was "slightly greyer than three months ago," Mr Coolican said that to concentrate on the short term for Parthus was missing the point to an extent. Parthus will issue its second quarter results next Tuesday. It expects to meet its forecasts.