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<p>To date, shortages of everything from capacitors to microprocessors haven't hurt the channel, which continues to receive allocation from suppliers. But, looking ahead, could prolonged shortages limit distributors' fortunes?</p>

By delivering the industry's first working silicon of 11-Mbits/s power line technology, Intellon confirms its place as a leader in the emerging area of home power line networking,” said Andrew Wolfe, chief technical officer of S3 Inc., the Santa Clara, Calif., chip maker which now has a line of consumer electronics products since its acquisition last year of Diamond Multimedia Inc. The company has a unique understanding of home power line communications and has been hard at work for quite some time to make this working silicon a reality. We look forward to developing products using this exciting technology.”

The stock market remains red hot, but does anyone out there remember electronic-component distributors? Several companies in the sector reported improved revenue and earnings for the fourth quarter, but investors aren't greatly impressed.

Compared with other segments of the EBN/Thomas Weisel Electronics Supply-Chain Stock Index, distributors have been a dud. The distribution index dropped nearly 2% since the beginning of this year-as of the close of trading on Feb. 9-vs. a 33% hike in the semiconductor segment. In 1999, distributors as a group completely missed the great gold rush on Wall Street. The segment fell 32.9% during the year, while chip makers rose 111.7%.

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Is this about to change? Some analysts think so, although most don't expect distributors to achieve the kind of skyscraper valuations Internet stocks and chip makers have enjoyed.

Order lead times are expanding, pricing is improving, and margins are increasing,” wrote Robert Damron, an analyst at Tucker Anthony Cleary Gull Inc., in an EBN column. (See page 31.) Combining the accelerating growth in computer systems with the strengthening semiconductor market should make for a very good year for distributors.”

Perhaps last week's performance is the first indication that investors may be re-evaluating distribution stocks. Distributors rose 2.3%, lifted by Merisel Inc. and Kent Electronics Corp. Distributors' unusually strong performance, combined with chip makers' and contract electronic manufacturers' typically sharp uptick, helped lift the index 7.6%, to 2650.3-its highest level-in the five-day period ended Feb. 9.

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The midtier CEM segment pushed the index higher with a 15.9% increase on the back of strong results announced by Benchmark Electronics Inc., which rose 31.6%, to $35.38. Plexus Corp. rallied 18.63%, to $59.91.

The market continued to be dominated by the leading CEMs, however. The stocks of Flextronics International Ltd. and Celestica Inc. notched double-digit increases on positive investor sentiment about the sector.

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On Wednesday, Celestica reported that its fourth-quarter earnings per share rose 63%, to 22 cents, from 13 cents in the year-ago period. The results prompted some analysts to once again raise their fiscal 2000 estimates for the company.

Meanwhile, power-converter maker Vicor Corp. ran into heavy storms last week. The Andover, Mass.-based company's shares fell 47.1%, to $21.69. Vicor's profits rose to 15 cents, from 8 cents per share in the fourth quarter of 1998. Investors apparently didn't like Vicor's explanation that the results fell 3 cents shy of analysts' estimates because of the loss of two major customers.

It looks like a leaner, meaner semiconductor industry is the end game. Perhaps Mary Puma, chairman and CEO of tool provider Axcelis Technologies, summarized it best: At the end of the day,” she said, those of us who will survive are those who have better, leaned-out, efficient business models.”

Ladies and gentlemen, start your Hummers.

By Nicolas Mokhoff (nmokhoff@cmp.com), special features editor for EE Times

PALM SPRINGS, Calif.–At the start of its annual developers forum here today, Intel Corp. executives demonstrated a 1.5-GHz microprocessor–code-named Willamette”–and new production-level Pentium III-based systems operating at 1-GHz speeds. The company also showed off a mixed bag of technologies and design innovations aimed at creating new generations of business and consumer PCs.

Intel chairman Andrew S. Grove told an audience of 2,000 developers that technology requirements are accelerating because of the Internet. He said demand on information technology is growing by power of 10,” requiring not only more powerful microprocessors but also an infrastructure that can be scaled out.

Because of the magnitude of the job of cataloging the world's information as represented by millions of Web sites, specialized portals are emerging that do a better job in each of their areas than the majors. Sometimes they are the arm of a membership organization or publication such as EE Times' www.eetimes.com for electronic engineering. Sometimes they are a new dot-com with an angle to attracting the attention of your customers. Visibility on portals that match your demographics are likely to grow to be even more important than the major search directories.

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