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Technology Stocks : Silicon Valley Group

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To: Artslaw who wrote (1617)	4/22/1998 1:24:00 PM
From: David Aegis	Read Replies (1) of 2946

Steve-- IMHO, SVGI has tons of cash, decent products, and significant operating leverage heading into the next up cycle. All of the bad news you list is, I think, already in the price of the stock. In contrast, none of the upside is priced in. SVGI earned over $2 per share in FY 1996 when there was next to no profit contribution from the lithography division. I have recently completed plant visits at the Track and Thermco divisions, and I think the new products in these divisions position them even more favorably than in FY1996. Profit from Micrascan sales will be icing on the cake. Intel, another stock I own, had an upbeat analyst meeting in NYC yesterday. I think that as Intle gets a better feel for the level of box builder demand for the Celeron and P-II chips and related motherboard chip sets, they will start buying equipment again. They will need to buy Micrascans to achieve their roadmap to .25 u and .18 u line widths. They will probably also buy some 200 APS's. A lot of suppositions on my part, huh? But I find a lot more compelling reasons to own SVGI at 20 and change than the broader market at 25 times forward earnings on the S&P 500. --David

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