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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 157.09-1.7%3:59 PM EST
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To: Ian@SI who wrote (3815)12/14/1997 8:57:00 PM
From: Justa Werkenstiff  Read Replies (1) of 10921
 
Ian: Re:"I looked at P/Book and P/Sales ranges for 1996 for a subset of the key companies - the most recent pessimistic year for Semi Equipment companies. From those ranges, I extrapolated a price range for 1998 assuming that its outlook is equally pessimistic."

So, then, does your lowest price level reflect the lowest P/B and P/S ratios achieved by these companies but recalculated for their present trailing four quarters worth of financial data?

I do not agree that 1998 will be as bad as 1996, but that is just my opinion and probably not worth debating as your opinion is just as valid as mine. I do think the move to .25u will go on regardless of other semiconductor market conditions as you got to be compeatin' or risk being eaten, and that is the focus of my current investment selection.

Re: "Essentially P/Book yields a "higher" low than P/Sales as well as a higher high than
P/Sales would."

I am not sure what this means as far as your methodology is concerned in arriving at your price levels.

Re: " This would suggest to me that the downside risk in KLIC, LRCX and SVGI are
limited at this point."

Knowing nothing else about your methodology at this point and looking at the raw numbers from the table you posted this weekend as well as the April, 1997 lows, I would agree with this point.

I would also argue that one should consider something more than P/S and P/B in selecting companies. Mr. Market has given us a trial run of how management has performed since 1996. Assuming that history repeats itself, I would focus on companies that managed themselves well since the downturn and take that into consideration just as much as I would consider a pure P/B and P/S analysis.
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