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Technology Stocks : Semi Equipment Analysis

SOXX 316.33

+1.3%

Dec 10 4:00 PM EST

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To: scott_jiminez who wrote (2313)	3/19/2002 9:12:01 AM
From: Crossy	of 95546

Scott, that is usually accepted that marketcap corrrelates with PSR. A reasonable explanation would be that SG&A costs do not "scale" accordingly (underproportional) when revenues rise due to a surge in demand.. The other metric to look at are "normalized" Gross Margins and the current gross margin trends.. You are right .. Investing in the "alpha stocks" yields subpar results. No news to me. That's why I never would invest in AMAT or NVLS - instead prefer to enter KLIC, SMTL or LRCX or MTSN.. there's another skew that one have to correct out of PSR's - it's the fact that the position in the value chain of each company and the nature of its operations have a repercussion on PSR. A retailer would have a lower PSR than a manufacturer for example.. Hence, PSR is used in strategic management theory to indicate "value flow" (see: Adrian Slywotzky's many books) and pros like Ken Fisher often cite it.. An Motley Fool often has some educational articles on the many ratios and their suggested use.. Another aspect: A commodity producer like WFR also has a lower PSR than a specialized tool producer. So it's better to evaluate the different "industry segments" first (draw the competitive relationships) and then place your bets among then by a mix of PSR anaysis and Gross margin trends. No indicator (not even PSR) is wholly meaningful in itself.. It'S all induction and the bigger picture.. rgrds CROSSY BTW: your conclusion is exactly right - avoid AMAT, KLAC & NVLS. No kidding..

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