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Technology Stocks : Semi Equipment Analysis

SOXX 309.40

+1.0%

Dec 5 4:00 PM EST

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To: Return to Sender who wrote (10089)	6/12/2003 3:02:20 PM
From: Cary Salsberg	Read Replies (1) of 95530

RE: "...how much real fundamental improvement has taken place?" The last earnings season seemed to indicate that "real fundamental improvement" had taken place. Revenues had become more stable and more companies were seeing sequential quarterly improvements. Prior efforts to lower break even revenue levels had stopped much of the losses and negative cash flow. Companies were prepared for the next recovery and the signs are that the economy will continue to improve slowly. The recent rally played on the idea of fundamental improvement, but was not strongly tied to it. There was much anticipation of the effects a robust recovery might have on some of these tech companies, but not enough careful examination of the relationship between current valuation and future expectations. Now, we have a correction due to technical factors and analysts downgrading based on "valuation". This is very healthy and I don't think it indicates any unusually gloomy future market scenario. We will be getting a host of corporate details through the current warning season and into the quarterly earnings season. As 2H '03 and CY '04 expectations become clearer, the market levels will adjust. The big run we have had since October '02 has had a large element of volatility about the bottom to it. As such, not only the cream has risen. This is a good time for long term investors to take advantage of "all the boats" rising and move to higher quality companies. Look at expected market growth, market share, and competitive advantages (significant barriers to entry and sustainable competitive advantages).

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