"Even if earnings fall through the floor for the next 2Q's, if the recovery comes into focus by late summer, all of the equips are going to explode."
I'm of the impression that this downturn is lasting for a while, and we should not be expecting recovery to be come visible within the
next few months. The semi industry seems to be weak across many
key sectors. For example, memory (weak since early '96) is showing no signs of price stability, and even microprocessors (which had been
strong in '96-97) is seeing weak demand (look at Intel).
Everything, of course, is related Asia, which was to have made up
most of the growth (especially for new capital equipment). The reality that the Asian situation is continuing unabated (and dragging other emerging markets down with it) supports the view that the high tech downturn will be with us for some time to come. I don't think that we should even dream about a recovery until the end of 1999. Even that's optimistic, because the Asian thing isn't a quick fix like say, Mexico. Asia is way bigger and requires way more help! We can expect a good long period of austerity there before they can start expanding their high-tech industries.
Still, I would say that we got some really good values here in leading semi-equipment companies. Just be mindful that the upside potential
will be limited for a least the next 18 months; there's certainly no danger of missing the boat on this one, and you may get even better bargains as the summer wears on. Hang tight, though, because when the next century comes, we will all be handsomely rewarded.
Wes |
