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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 143.23-2.9%Nov 18 3:59 PM EST
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To: Proud_Infidel who wrote (4175)12/28/1997 4:36:00 PM
From: Jay M. Harris  Read Replies (3) of 10921
 
Brian,

Windows 95 was the most successful OS ever launched in late 95 and 1996. Intel's pentium (32 bit computing) became Intel's most successful product cycle ever (pentium inside program). Internet users grew from 25 million to 76 million globally over a similar time frame. All of the above drove 100% memory bit growth YOY. Yet the entire equipment group traded down to 1X revenue with only 1 major commodity fab going bankrupt.

Brian, everyone in the world knows that AMAT is a great company! Can you tell me why only 12 months ago it traded to 1X revenue? Also, what is better during the current DRAM death spiral in prices this time around relative to 1996 given the super macro backdrop of my first paragraph for you to make this statement "This leads me to believe that analyts have already priced in a continued abatement of DRAM spending." ? Answer: not the $1,000 PC ; Micheal Dell's direct model; Korea; or the recent surge in the US Dollar, ect. These anecdotes didn't manifest themselves during the last cycle. However, they are today! Frankly Brian, if memory bit growth (Supply) hits 200% this year 1998 (quite possible without any incremental capacity), from die shrinks and the move to 64 meg on 8" wafers) a 16 meg DRAM should sell for $1.50 and the entire equipment group could easily repeat 1996 valuations. Remember, that Micron Technology tripled bit output in its latest fiscal year with a 50% reduction in capital expenditures during the same year.

Good luck being long, I hope you are successful,

Jay
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