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Technology Stocks : Semi Equipment Analysis

SOXX 309.40

+1.0%

Dec 5 4:00 PM EST

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To: Return to Sender who wrote (88588)	6/30/2022 8:23:33 PM
From: Johnny Canuck	Read Replies (2) of 95531

Ouch, 27 percent miss on forward EPS and 37 percent miss on revenues for micron for forward guidance. We will have to wait for the conference call but a glut of inventory has been talked about in the channels. Cathy Woods from Arkk talked about in May. Again not a great fund manager but a decent economist, her real background. A lot of manufacturers ordered extra parts but because some are missing or they bought too much they need time to work through their inventories. The last time this happened it took about 18 to 24 months to clear the glut and stocks prices of the chip companies fell another 50 percent from the current levels. MCHP was $24 at the time I bought in, down from about $70. A lot of caution may be advised as lower end user demand as the economy enters a recession with a glut in the channel is a receipe for lower EPS and sales for a few quarters. Obviously the conditions are a little different but the contraction in multiples may be similar. We might actual see some deflation if the capacity utilization at the Fabs fall also.

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