Tencor Instrument, a technology leader in wafer inspection equipment
is decidedly undervalued with respect to both past earnings and future
growth. The company recently restructured to address rapidly expansion
and invested heavily in R & D, is seeing high order intake with last
quarter book-to-bill at 1.3
Memory prices are coming down fast which will spur demand from both PC
upgrades and rocketing network server sales. Tencor is unreasonably
beaten down together with the rest of the Semi-Equipment makers due to
the wrong perception of slowing growth of equipments. But for Tencor
lower memory prices means higher wafer production to meet greater
volume demand. State-of-the-art inspection equipments are needed in
greater number for the expanding manufacture capability of the Japanese,
Korean and Taiwanese Fabrication Plants. A clear indication of the
equipment demand is provided by the January equipment book-to-bill of
1.22 A majority of the equipment order probably goes to the wafer
inspection requirement.
In today's stock action, while all the other semi-equipment stocks are
flat or lower, a surge in TNCR's stock price from 21 to 22.5 in a short
period of time is quite evident that Tencor is buying back shares in
the open market to fulfil its recent announcement of stock purchase plan.
Down from a high of $49 the stock presents extremely good value. Expect
the stock to return to its high in the next two quarters. |
