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Technology Stocks : Semi Equipment Analysis
SOXX 305.32-0.2%Dec 29 4:00 PM EST
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To: Return to Sender who wrote (9658)5/1/2003 9:11:57 PM
From: Cary Salsberg  Read Replies (1) of 95646
 
RE: ""We continue to believe that the company is struggling in a low-growth environment and internal power struggles are impeding the ability of the company to set a clear strategic direction,"

I don't believe AMAT is "struggling" and the current "low-growth environment" is not news or AMAT's company specific problem. I don't believe that the company doesn't have a "clear strategic direction" and I don't believe that there are "internal power struggles."

This analysts view would be accurate if Morgan had died of a heart attack 3 months ago. Morgan is still there and he has a little experience dealing with downturns and strategic direction.

RE: "The semiconductor capital equipment industry is moving through significant structural changes which could lead to a declining cap-ex-to-revenue ratio and potentially smaller market opportunities during the next cycle for equipment companies."

The "significant structural changes" involve foundries and consortiums. This is a reaction to increasing fab costs. The key future variable is semi IC revenue growth. Expectations are that constantly improving price/performance will promote higher chip content in the economy and probably higher dollar value compared to GDP. Higher dollar value means higher revenue. Foundries and consortiums are likely to promote more efficient use of fab capacity. If revenues increase, if revenues are profitable, and if fab utilization is more efficient, then there is reason to believe that cap-ex-to-revenue will be equal to or greater than historical ratios.
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