Teri,
Re:I see absolutely no rational evidence for a rally in the semi-equips during '98. We have over-capacity on the supply end of things and an economic "crisis" in Asia where alot of high-tech growth/demand was going to originate.
The Asia/Pac region consumes ~20% of chips; most of what they make is exported. Unless there is a change in demand outside of this region for IC's, things are still looking pretty good. The growth factor of asia will be important in the next century but for now, it is not much of a factor in terms of chip consumption so your point is a moot one at best.
There is one rule which I think applies to all things: never generalize. The overcapacity issue you speak of is well known and is limited to the DRAM segment for the most part. Please fill us in if there are other areas suffering from overcapacity. The foundries in Taiwan are running at full bore. INTC is chalking up decent gains in a transitional period for MPU's. It is also speculated there will be a shortage in SRAM's later this year. The "glut" you speak of in DRAM's may in fact be obviated sooner because of the asian crisis, hence justifying a run which many say will not come this year.
JMO, but things are looking excellent for this sector and the current environment of dropping interest rates could justify a price of $70+ by year's end.
Below is an excerpt from and H&Q analyst. His target for '98 was $60. MSDW has a target of $68 for '98. I have a target of $70 plus. If we are all proven worng and AMAT does not reach our goals by year's end, IMO it will not be long into '99 before AMAT hits these prices.
BTW, DD has not been posting much here lately. He, along with several others bears, have said they may grow horns if DRAM prices stabilize, exactly what we have witnessed during these past few weeks. Be careful before you use him to justify your position or lack thereof; he may have changed teams.
Hambrecht & Quist analyst Gus Richard,
who classified himself as a bear on Applied about six months ago, says he has
recently done an about-face and is "growing really excited" about the stock.
Although he has not yet upped his neutral rating on Applied, he says that all
the fundamentals that would prompt an upgrade are there, and it's merely a
question of timing. "Managers should be using this weakness to build a
position," he argues, claiming that Applied's stock could go as high as 60 in
the next 12 months. In fact, the stock rose 1 15/16 Wednesday to close at 32
_, as Nasdaq rallied.
Regards,
Brian |
