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Technology Stocks : Semi Equipment Analysis

SOXX 306.28

-1.0%

Dec 4 4:00 PM EST

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To: Alastair McIntosh who wrote (5672)	9/27/2002 2:48:27 PM
From: Cary Salsberg	Read Replies (1) of 95525

RE: "Next year looks bleak." Analysts pretend they can see "next year", but I don't think we need to. I think we can do better with hindsight. Hindsight tells us that Q2 2002 grew faster than it probably should and Q3 2002 has slowed to compensate or adjust for error. End user demand is a ? for Q4 2002, so the caution in Q3 is currently being extended to Q4. Just as we had no clue in Q3 2001 what Q2 2002 would look like, I suspect we will need to wait to see what 2003 will look like. BTB always follows orders because revenues lag orders. I agree with "declining" BTB, but I don't know what "well below" means. BTB is tricky because revenues have to hold up better than orders for a decline to happen. It is not obvious why a company will not postpone immediate delivery (reduces revenue) rather than cancel orders 6 months out. Capital spending budgets are more flexible in this environment, so next quarters budget is more important than next year. Fabs are being brought up one production line at a time. You will be right or wrong about "new lows". Current uncertainty vs "near historic lows". RE: "Over the longer term..." "victim of its own success" is sort of an oxymoron. Here is where I think your weakest argument is and where you are confusing "long term" with "short term". You have only to look about you to see the effects of "finer geometries" and larger wafers. Now, because of the mess we are in, you conjecture that faster, cheaper, smaller, more powerful, less power consumption will no longer produce new applications and rapidly rising revenues. The new applications are appearing constantly. The real question is when will the momentum of the new applications be sufficient to overcome the inertia of this bubble aftermath? I don't have a ready answer and I know that this uncertainty has pressured and will continue to pressure stock prices. I would not label this phenomenon "long term".

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