re: As belief in the slowdown takes hold, I see little upside for the stocks and too much risk.
Listening to interviews and CC questions, every single question the analysts ask management (semi and semi-equips) is some version of:
is demand softening?
are you going to warn (again)?
is inventory increasing?
Pushouts?
credit problems (you or your customers)?
One main reason I bought now, was because I think a belief in a slowdown has already taken hold. That is, it's in the stocks (now). From the time the stocks peaked, until November, there was a lot of confusion, and wishful thinking. Now, the analyst community, and the business press, has reached a consensus. The new Party Line is: demand for chips will be less than anticipated, and therefore demand for semi-equip is going to be less than anticipated. Everyone is anticipating and expecting reductions in capital equip budgets for 2001. The range of debate is whether we get a hard or soft landing. By buying AMAT now, I'm betting on a soft landing. If we get a hard landing, we'll see AMAT at 28-30 in 2001. And if we get a coincident recession in the overall economy, we could see lower. Yes, lower. If we get a soft landing (for the industry and economy), it's in the stock, and the 38-40 support line may hold. All IMO.
My guess is that semi-equip bookings have a modest, irregular downturn in 2001, bottoming in 2Q or 3Q, and then go up (again, modestly). Then they continue on up through 2002.
As always, there will be lots of volatility in the stock. A 30% range every month should be expected. False rallies can add 40% to the stock price, and then we set new lows, and this could happen repeatedly.
At the moment, the stock is trying to decide whether to reestablish support, and return to the 40-54 trading range. |
