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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders
LRCX 161.24+2.4%Nov 3 9:30 AM EST
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To: etchmeister who wrote (5805)10/9/2009 2:44:54 PM
From: cluka1 Recommendation  Read Replies (1) of 5867
 
etch,

In January Lam said it will take 6-8 qtrs for situation to improve.

I did not pay much attention to them then and I am not paying much attention to what industry insiders say now. They are always extremist.

You say NVLS is looking at $2 earnings. Think of it this way, what sort of revenue do they need for those earnings? At that level of revenue, how much do they need to expand their inventories? How much will they need to expand receivables? Where is the money? Even if they got orders at that level they could not handle them. It's a pipe dream.

Not to mention that margins are going to narrow for all the industry players (exception may be ASML). On top of that spending on research has to go up. And in this difficult situation these guys think they will be making more money than ever. It makes no sense.

But even if their forecasts come true, what do you value NVLS at? Are you going to let analysts sell you that 20x cycle peak earnings? I sure am not going to pay that sort of price for any stock in this sector. Once earnings get to these levels you know there is oversupply. I do not believe device makers will let next cycle get out of hand easily given that number of them will be much smaller than in the past.

Stock prices of Semi-equips are ahead of where they should be at this point. I love buying this sector at bargain prices and am happy to wait year or longer. At current levels I have no interest.
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