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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 139.60-6.2%3:59 PM EST
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To: Q. who wrote (4089)12/23/1997 6:45:00 PM
From: Jay M. Harris  Read Replies (1) of 10921
 
John,

You may be correct that Korea only represents 11% of global equipment purchases. The cycle is over irrespective of the Korean exposure. The fact of the matter is that commodity semi components represent 50% of the global target market for equipment. Also, that all commodity producers around the globe are losing money currently!

I can tell you that the great Wall Street analysts in most houses are currently modeling flat to up 10% global semi cap ex in cal 1998. I will also tell you that there is still significant risk to equipment company valuations including SFAM. A good question for SFAM management is what % of targeted equipment sales in 98 are going to the disk drive and commodity based chip clients? I'll bet that percentage is much higher than 11%. Remember, that all of those clients with the exception of IBM are currently losing money on operations. I will finish by telling you not to value Equips on P/Es . The earnings estimates out there are artificially propped up until the major houses have had the chance to get the last of their respective clients money out. You will experience more dreaded analysts downgrades.

Good luck to you, AMAT and SFAM are great long term companies,

Jay
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