Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 148.83

+3.9%

Nov 19 3:59 PM EST

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To: Ian@SI who wrote (3607)	12/2/1997 7:42:00 PM
From: Robert Einstein	Read Replies (2) of 10921

To ALL Mr Kurlak with Mer Lynch. He is very respected Semi Analyst. Below his comments. Please respond. It appears the low-end computer is replacing the high-end & Not adding to demand for ASPs (Advance Signal Processors), such as the Pentium 11. It seems to us that bandwidth limitation is having the major impact on customer preferences for low-end PC's. The lack of bandwidth is a fundamental road block for highend microprocessor% because the intemet is today's "killer ap." Surfing the Web does N(Yl' require more power in microprocessitig, it requires more bandwidth in the line that feeds the data to the computer. Bandwidth is the problem, NOT power in the PC. At the same time other semi end markets are slowing. Recently, VLSI & Altera's customer demand has -.lowed. Order rates have softened for chips in the wireless market. Tcleroms have been pulling back on the reins as well. (ustomers of Altera are high-crid corporations (not consumers) & those companies are pulling back on spending (End demand is slowing & looks like it will worsen). There is no worldwide boom in any one particular industry group. The strong are surviving & the weak are NOT in most end-market demand groups (i.e.: Telecoms, Wireless, PC's, Data networking ... ). Were expecting Intels'Q4 revenues to decline 2% yr-over-yr on a 20% increase in unit growth. We think this is the beginning of the real end-cycle for the semi industry. Supply is still in excess of demand & end markets are slowing in most groups (Workstations, Servers. PC's). Q4 assumption for semi group: Expecting a 90/9 contraction in earnings Q-Over-Q. We expect the Street will have to cut estimates as we have done on several companies. *We expect 40% to 50% cuts in capital spending & layoffs throughout 1998.* It's unlikely the semi stocks have seen their lows. We might have another 25% downward risk in the group as a whole going forward. We're NOT looking to buy for a bounce on any weakness. We don't expect much follow-through on any possible near term strength. We recommend reducing positions on semi stocks on any rallies.

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