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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders
LRCX 159.13-4.4%Nov 11 3:59 PM EST
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To: Cary Salsberg who wrote (5509)7/21/2006 3:33:14 AM
From: Wes  Read Replies (1) of 5867
 
So what's everyone's view of what's going on with the Semi Equipment sector?

From looking at Gottfried's charts, it seems average monthly bookings are still well below historical highs. However, (from Cary's table) it seems leading companies like AMAT have been able to grow revenues (and earnings) so that they are near the 2000 peak. It would seem that this would justify higher stock prices than we've seen in the last couple of years (of course, no where near the high levels in 2000).

Obviously, the easiest explanation is the prevailing concern is an expected drop off in orders and the typical bust part of the cycle. But another effect that seems to be happening is a contraction of valuations to where they were pre-1997ish, prompted by the perception that the semiconductor industry is now maturing, and products like the PC are nearing saturation. So, while we see revenue and earnings rise, the stock prices stays flat and even declines over time. But when there's bad news or even the perception of bad news, stock prices still decline sharply from their depressed levels.

But counterbalancing this is the notion that with the industry maturing, the cap expenditures, etc. would seem to be more rational and the industry would be subject to more moderate swings, rather than the sharp boom-bust cycles of before. And even AMAT in recent months has maintained that they think the cap investments by chipmakers have indeed been "rational" and downplayed the perception of overcapacity and overbuilding.

Is there more going on than this? Insights, comments?
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