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Technology Stocks : PRI Automation (PRIA)
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To: Nevin S. who wrote (434)6/3/1998 7:55:00 PM
From: Paul Getman  Read Replies (2) of 1214
 
I think the downgrade by H&Q of Intel had a lot to do with PRIA's slide today. H&Q says that Intel will probably preannounce another earnings shortfall for the second quarter, but Intel after the close denied it.

Anyway, PRIA and Intel are intertwined, so I don't think PRIA's slide will end until investors are confident that Intel's business is stabilizing.

This reminds me exactly of what investors did to bank stocks in the early 1990's. Banks were under tremendous pressure from bad real estate loans and newly instituted capital standards. Many banks failed. Bank stocks plunged to absurd prices: Citicorp, $9; Chase Manhattan, just above $10, etc. Investors didn't care that some banks had made hardly any real estate loans, or only loans that were well collateralized--they were thrown out of the portfolio as well.

Nobody seems to care that PRIA has (basically) a lock on automation, or that efficiency and cost cutting will force a move to 300mm (perhaps a little later than we would like), or that PRIA's book value is near $14--they just want it out of their portfolio before quarter's end.

Where are the investment banks like H&Q and Morgan Stanley, both of whom thought PRIA was a Strong Buy in the mid-20's? You would think that a $10 drop in price would have more than compensated potential investors for whatever increased risk has developed since March, when they last recommended a buy on the company. But they're eerily silent.

Paul
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