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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 155.00-5.0%3:59 PM EST
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To: Ian@SI who wrote (9254)1/16/2001 8:30:11 PM
From: Czechsinthemail  Read Replies (1) of 10921
 
But INTC raising its CAPEX to $7.5B from $6B for 2001 goes an awfully long way toward raising confidence in the Semi Capital Equipment sector recovering sooner rather than later.

A 25% increase in capex spending by the biggest of the semi companies is clearly no small thing, and semi equips have moved up significantly in after hours trading. The Intel news seems to be having much more impact than announcements of dramatically reduced bookings and lower revenues and earnings going forward, so clearly somebody feels more confident about the semi equip companies.

But I'm wondering if the news out of Intel presages a faster recovery of the semi equip sector or instead provides some braking that slows its decline. In addition to its capex announcement, Intel predicted a 15% sequential revenue decline and added that they didn't have enormous confidence in the forward guidance. If it begins to look as though the economic decline will be more severe and lasting longer than two quarters, semi capital spending could face larger declines and a slower recovery. Similarly, if Intel doesn't see some evidence of pickup in PC sales, isn't it conceivable that they would flatten or cut capex spending later in the year when everyone is expecting the second half comeback?

Maybe I'm just suspicious of the view that all the blood is out and the recovery will be quick and easy.
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