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UPDATE 1-Berenberg cuts Ericsson, Qualcomm, Imagination to sell
June 11, 2012 / 10:01 AM / 5 years ago

UPDATE 1-Berenberg cuts Ericsson, Qualcomm, Imagination to sell

* Sees margin concerns, higher competition for tech companies

* Has “sell” rating on 16 stocks, including Nokia, Cisco, RIM

June 11 (Reuters) - Berenberg Capital Markets downgraded Ericsson, Qualcomm Inc and Imagination Technologies Group Plc to “sell” from “hold,” citing margin concerns and rising competition.

Berenberg, which maintained its bearish view on the global technology sector, said it is negative on 16 of the 22 stocks in its coverage universe, including Nokia, Cisco Systems Inc and Research in Motion Ltd .

While Ericsson will see pressure on its revenue and margin, Qualcomm’s market is getting crowded with the arrival of Intel Inc and Huawei Technologies, Berenberg said.

Apple Inc and Samsung Electronics Co Ltd dominate the wireless semiconductor market.

Imagination Technologies lacks the pricing power relative to Apple, which accounts for about 50 percent of the company’s royalty volumes, the brokerage said. Samsung accounts for another 20 percent.

Berenberg, which cut its price target on several stocks, said Arm Holdings Plc, Apple and Samsung are its only “buy”-rated stocks.

Earlier this month, J.P. Morgan Securities cuts its 2012 outlook for IT spending growth citing a slowdown in global production trends and spending by China.

The Thomson Reuters Global Technology Index is down 7.3 percent since the start of May.

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