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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 161.43+1.4%3:59 PM EST
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To: space cadet who wrote (4350)1/7/1998 6:33:00 PM
From: Mason Barge  Read Replies (1) of 10921
 
<<I don't think we will see the kind of valuations on the semi-equipment suppliers that we saw this summer anytime this century.>>

I think you're a little pessimistic. If you look at the history of semiconductor equip. issues, there is a cycle defining a long-term upward trend as semiconductor sales increase and equipment cost as a percentage of semiconductor sales increases. That is, a long-term trend towards a larger number of more expensive products. Bottom-to-top has historically been in the 12-18 month range, for whatever that's worth.

Everybody and his brother seems to accept a ramp-up to 300mm in mid-1999, meaning the orders should come en masse sometime late this year. (Also, the litho problem is eventually going to get straightened out to some degree, although admittedly the major money may not really start pouring into this for more than two years -- still, there will be considerable spending on DUV in the next couple of years.).

So the btb's have to come roaring back and with a lot more money on the line. When they do, and the earnings estimates start jumping, the price multiples are going to head north. I just can't see this failing to occur later than 18 months from now unless there's some general economic disaster, so my wild guess is that we'll see the industry as a whole not simply exceeding the highs of this fall, but about 30-50% in excess, before the end of 1999. IMHO
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