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 142.62

+2.2%

Nov 21 9:30 AM EST

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To: cfimx who wrote (4007)	12/20/1997 5:52:00 PM
From: Jay M. Harris	Read Replies (1) of 10921

Twister, buy equips after equipment spending as a percent of global semi revenue falls below 21% for a short period of time. This will cause an uptick in memory prices as supply and demand comes into better balance. The 50% semi annual uptick in memory prices will reassure chip OEMs that it is safe to begin to add profitable capacity because inventory excesses will have been cleared and old capacity brought off line. I saw the Goldman upgrade of Micron. This was the second analyst in two weeks to upgrade Micron. I wonder if Goldman is going to get some Micron underwriting business? They are esitmating $.10 for fiscal year 1998 (August) for MU and $1.50 for fiscal 1999. However, the Analyst is "not calling for an immediate end to pricing pressure as inventory still needs to be worked down". This was a value upgrade and in my opinion this analyst is early. However, I do admire his courage for making a tough call. I just think we shall see MU at $17 some day. His thesis is that the accelerated price declines in the memory market will lead to an accelerated cycle and eventual recovery. He feels a lot of 6" capacity is currently comming off line. Also, he is looking for DRAM per PC to increase in 1998. 32 meg of DRAM per PC (current config) costs roughly $45 per box. This is down from $370 for 16 meg of DRAM per PC in 1995. He sees sub $1,000 PCs moving from 16 meg to 32 meg and higher end machines moving from 32 meg to 64 meg. I agree with the analyst on the demand side and that bit growth may approach 100%. However, I respectfully disagree on the supply side. I see the over capacity running bit output much higher than 100% with prices declining to US $1.50 for 16 meg. I do expect a year end rally as the group is oversold technically with year end window dressing in large cap. However, I see another down leg in semi land in q1 1998 before it will be safe to buy. Again, 1X revenue for the entire group. I prefer to wait for the indicators I described above! They have served me well in the past and I will use them again. Jay

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