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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 163.10-0.7%3:59 PM EST
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To: Sam Citron who wrote (2828)10/20/1997 5:15:00 PM
From: Cary Salsberg   of 10921
 
Sam,

RE: "If R&D expenditures must rise in 1998 and 1999 to develop the next generation tools, but the technology is not in place until 2000-2001 time frame, will this have a big impact on 1998 and 1999 profitability? Do you think most '98 and '99 estimates are sufficiently discounting this reality?"

Short answer: Yes and yes.

Longer answer: I recently noticed that Merrill Lynch was forecasting much larger R&D expenses as a percent of sales for EGLS than their track record showed. And this was on strongly rising, record sales projections. ML gave the transition to 300mm as the reason. In spite of this, ML was forecasting $1.90 for 98 compared to a current concensus of $1.50. My conclusion is that the uncertainty in '98 and '99 EPS estimates is in the sales forecasts much more so than R&D forecasts.

Cary
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