Varian Semiconductor Equipment Associates -- VSEA Message Board

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Technology Stocks : Varian Semiconductor Equipment Associates -- VSEA

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To: BMcV who wrote (1119)	10/27/2000 10:33:20 PM
From: Proud_Infidel	Read Replies (1) of 1929

PSR < 1 has usually been a good indicator This has been proven over time to be one of the best indicators of value. I remember about a year and a half ago, WFR was trading at about a PSR of .5. At the time, the upturn was not in place(no visibility), and they were having trouble getting financing. There were rumors of bankruptcy if my memory serves. And the market they serve(wafers) is a commodity market and they do not dominate. Almost the complete opposite of VSEA. And yet, their PSR was not much lower than where we currently are(although I am using Q4 rev and annualizing it; not using TTM revs) And even if we are in some sort of super-cycle, which I find perfectly plausible, won't there be so many people looking for the exits that these stocks may not exceed the recent highs until the next cycle? This is indeed one of my concerns. When these stocks are cheap, people do not want to buy because the companies are burning through cash because industry revs dried up. Once things are looking better for the industry, people are still hesitant, because the industry cycle only lasts X months and by damn if I'll be stuck holding the bag. When things are really looking good with several drivers where before we only had one(like now), people assume it has got to end any day and bail at almost any price. Hence we rarely get what I would call a "fair" multiple. Without VSEA, the fiber that Corning sells might as well be a fishing line. You need IC's on either side to process the data; the investment community never recognizes this simple fact. This has been frustrating, especially since the sector is trading where it was last October. Between then and now, much new information about the duration and strength of the cycle has come out showing that this time the cycle is different. I have a link of S. Billat saying this exact thing that I posted yesterday. The question at this point, is when does the market assign a reasonable valuation to these companies if indeed we have 18-24 months left? Brian

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