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Technology Stocks : Semi Equipment Analysis

SOXX 299.48

-4.8%

Dec 12 4:00 PM EST

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To: The Ox who wrote (15769)	6/17/2004 9:14:06 AM
From: robert b furman	Read Replies (1) of 95574

Hi Mike nd Don, Your referenced article combines two major themes that are not getting a proper weighting from the analysts. 1) any growth above last quarter and this quarter will result in strong bottom line performance. 2)All SCE companies have undertaken "rightsizing and downsizing such that net profit margins are occurring at below peak levels of revenue. 13.7% bottomline margins is very near the seldom seen 15% of the last cycles peak. It would appear that these companies have very robust abilities to ramp up to increased rvenue levels and achieve most impressive net profit margins at revenue levels below past cycle peaks. As analyst discuss rate of growth declines - these companies will come in with above peak net margins on very small top line growth. I believe the industry has matured and the scar tissue of past cycle troughs has resulted in a very timid to expand in plant and people mindset that is more than able to ramp up within new company sized current structure. This will with time prove to be an expanding profit sector and I believe the multiples will grow once bottomline profits surface to show how powewrful the new business models/size prove out. Like Amat says - it is just beginning. I also think it is important to know here we are in the long term business cycle and how it relates to the market. We are in the beginning stages of a global recovery where lod laggards like Japan are alive and well with Europe yet to look healthy. Add to that new players like China sucking up low tech capacity. Also add to that past over achievers like Taiwan and South Korea and we have the broadest recovery occurring simultaneously. The price of oil is the best confirmation of this in my way of thinking. Last but not least, remember that after coming off a bottom,which has already occurred, the overall market breadth peaked in 97. The wonderful market we all remember in 98-00 occurred after the general market breadth numbers peaked in 97. So the SCE cycle is a late final bloomer. IF we get a repeat again it will not only be late in the cycle ,but it could also be the only game in town again .If that repeats it sure could be powerful all over again. More than likely an 05 - 08 event (as 97's breadth top to the semi's 00 blowoff .bomb was)?? Bob

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