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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 142.62+2.2%3:59 PM EST
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To: geoffrey Wren who wrote (3553)11/26/1997 1:55:00 PM
From: geoffrey Wren  Read Replies (2) of 10921
 
Thread, could not the asian crisis be a positive sign? As finances go, as lenders and chip-makers look and see expensive plants in Korea and elsewhere that cannot generate cash flow to amortize their sunk costs, they will now allow for a shorter time frame for recovery of plant costs in planning new building. Thus say before a plant would be built if it could recover its cost in 5 years, now the plant will not be built unless it can pay its cost back within 4 years (the times are arbitrary here). This would seem to indicate that fewer plants would be built. But looking at it from another angle, if the financial equation is simply a reflection of the outlook for technological innovation, the lesson is that rapid obsolescence must be accepted, which suggests that there will be greater demand for equipment down the road. Does this make sense?

Geoff Wren
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