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Technology Stocks : Semi Equipment Analysis
SOXX 299.81+2.7%Dec 19 4:00 PM EST
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To: Pam who wrote (41943)12/2/2008 11:54:45 AM
From: cluka1 Recommendation  Read Replies (1) of 95617
 
Pam,

This is a deeply cyclical industry. Go back and look at bottoms and look at what sort of revenue drops and earnings were. These are the stocks you buy when PE is HIGH and sell when PE is LOW. Look at Gottfried's charts and you will understand. Revenue drop of 30% is nothing new for those that have followed SCE sector for a while.

Your guide for buying in this sector is Price/Sales. Take a company, look at it's 2008 sales, reduce by what you think drop will be and figure P/S. When you compare P/S between companies, consider their historic margins, size, financial strength. For AMAT 2x at a depressed revenue number has never lost money. KLAC is close, LRCX somewhat lower.

Question is if this cycle is different, has something changed, and by how much. Looking at the current stock prices market believes there is more to this downturn.
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