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Technology Stocks : KLA-Tencor Corporation (KLAC)
KLAC 1,145+0.8%3:59 PM EST
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To: Russell A. Spreeman who wrote (333)11/22/1996 8:53:00 PM
From: Steve Pimpis   of 1779
 
I agree with your assumption that KLAC has jumped in response to the announcement that the semi equips. have bottomed.

However, KLAC's growth market is in the far east especially China over the next few years. Look at most of the equips. recent PR's they are putting a huge amount of emphasis on supporting the Far East markets. Making KLA's technology impossible to get in this would be catastrophic (SUICIDE) to the company.

KLA is now trading at a premium in relation to other equip stocks, TNCR is now seriously starting to compete with an eat into KLA's market share. In addition, TNCR owns the wafer surface profiling market which KLA does not compete in. In my opinion "long term" TNCR
will out perform KLAC and is now trading at a discount to the rest of the market. KLAC has had a monopoly on the wafer inspection market for some time and now they are getting some serious competition from TNCR, and Orbot, that they will have to ward off to maintain their position.

By the way Leica brings little or no technology to the table. They are piggybacking on KLAC's technology.

In any case I think KLAC has some significant challenges ahead and needs to maintain their industry dominance by growing in the Far East marketplace. Therefore for the long term I would put a biq ? in the KLAC column. What is concering is the 96 EPS forecasts for KLAC of $1.64 vs. $2.09 for TNCR.
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