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Technology Stocks : Semi Equipment Analysis

SOXX 304.92

-0.1%

Dec 30 4:00 PM EST

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To: Gottfried who wrote (31455)	7/13/2006 6:40:25 PM
From: etchmeister	Read Replies (1) of 95652

Hi Gottfried i see two issues: 1.)Bookings=precursor for billings = profit $$$ The price moves in anticipation; we are now at a point where price seems to peak when bookings just begin to move upwards (the buzzword is ordergrowth - second derivative); in the past the price would peak 2 to 3 months ahead of bookings peak - now it's almost 2 quarters ahead of the peak 2.) the frustrating part; the market is either underestimating earnings potential or the way how they "value" future earnings has changed (forward PE is now 12 rather 18) or it's a combination of both. Good example was yesterday's downgrade: the guy ups earnings and at the same time lowers target because the higher earnings are not relevant anymore because the cycle peaked (and to make sure he gets attention he threatens with option backdating). He does not even consider possible improvements in margins - just ups earnings based on better outlook. Actually now calling a peak is somewhat reasonable at this point but they have been calling the peak since December 2005 - I noticed the peak callers never/hardly quantify the peak - they just call a peak and like a broken clock they will become correct at some point. The same what happened to KLAC yesterday happened to LRCX. However in case of LRCX the earnings estimate was way, way off and the stock was able to buck the trend. You had to buy way back in feb 2005 and that was pretty risky because bookings continued to slide and there was great deal of nervousness in the summer 2005 because bookings continued to slide Fundamental research hardly pays - you really need to adopt this completely reversed mentality. All we can do is look forward

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