<<But I'm being very cautious here as the market is increasingly dangerous with a growing realization that many companies will not make their earnings, >>
Elroy, JMO, I found most of the earning warnings are from large cap stocks and glamerous companies such as Nike, MMM, Coms, Intel. In those cases, peope's expectations are just too high. You can't expect a company to grow earnings 30% forever.
But I agree with you, the market place is a dangerous one right now. All of the means that companies used to boost earnings in the past are exhausted, such as layoffs (lean) and outsourcing. The great part of earning increase during the last few years was from cost-cutting, not from revenue growth. But we can't cut cost forever. With problems in Asia etc and the ultimate slow down in U.S. economy, the earning picture for the majority of U.S. companies is not pretty.
In the semi equip sector, expectations were high too. Some might experience disappoints in the middle or late of 1998. But I just keep thinking Cymi is different. Currently, many companies delayed their conversion because 0.25um tools are not available. That means Cymi and its stepper customers just can't produce enough steppers to satisfy a industry wide conversion. So it is a supply issue, it is not a demand or market being soft issue.
One good sign I saw in this scenrio is 40% of AMAT's equipment sold during the recent quarter was for 0.25 technology.
You know, the conversion from 0.50 to 0.35 was extremely fast, it only took months for the majority of the world's fabs to finish such a conversion. How can Cymi and its stepper customers produce so many tools to support this giant semi industry for such a huge conversion ? So my thought is, despite possible disappointment from other semi equip companies, Cymi's case is different.
Obviously, the stock market has not seen the difference between Cymi and other semi equip companies. The short sellers can only see Cymi's "problems" and "order pushout." But time will tell.
Just my opinion only. |
