Speedfam [SFAM] Lovers Unite ! Message Board

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Technology Stocks : Speedfam [SFAM] Lovers Unite !

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To: Christopher Adams who wrote (3119)	7/14/1998 7:25:00 PM
From: Jay M. Harris	Read Replies (2) of 3736

Hi Chris, capacity utilization out of the big 2 foundries in Taiwan is running below 70%. The momentum of order deceleration for the equips over the last 2 weeks has picked up steam. AMAT has acknowledged this morning at Semicon West that the current down cycle will be longer and deeper than 1996. They expect a 28% industry decline in capital spending for cal 1998. It is pretty ugly, but we have yet to reach a bottom in the equips. AMAT is expecting a recovery this time next year. AMAT's current cost structure is breakeven at $700 million of orders. Layoffs are around the corner. SFAM: The word on the street is that SFAM should break even this quarter. They already shipped 4 tools that were pushed out last quarter and several more are ready to ship in the current quarter. This is a quality company and I strongly disagree with many opinions on this thread that SFAM is doomed because of AMAT! As you are aware, I was one of the few sponsors of IPEC when the SFAM thread had 2,000 posts about running IPEC out of business. As usual, I now disagree with many who conclude that SFAM is in trouble just as the stock is hitting new lows. Metal interconnect: Clearly the capital equipment industry is in the process of consolidation. This has to due with the current industry recession. However, the challenges associated with copper and low K dielectric is a major reason to expect more mergers in the future. Currently, AMAT is the only US company than has a deep enough tool set to migrate the device makers to Gigabyte/GHZ integrated circuits. This has caused the alliance of LRCX - for Etch; NVLS - deposition; & IPEC for copper CMP using an ontrak post copper cleaner. The device makers welcome these joint ventures for a second source vis-a-vis AMAT. Frankly, AMAT is in one hell of a position long term. However, the entire cap equipment industry is running and partnering as fast as they can to stave off AMAT before copper moves to production near the end of cal 1999. This process will decide which cap equipment companies merge to compete against the AMAT cost structure (1 administrative cost structure vs 3 or 4). I have stated several times that SFAM & IPEC would make the best capital equipment merger I can think of. We shall see as the blood flows in equipment land and device makers pressure equips for the copper process step. OFF-Topic Finally, most of my portfolio is currently large cap. High Tech= MSFT; CSCO; INTC; TLAB; AMAT; ASND; RATL; HBOC;EMC; CPQ. I missed the internet stocks and DELL Health care= SGP;PFE;MRK;BSX;MDT;JNJ;AMGN Finance= CMB;NB;CCI; FTU; BEN; AIG;MER;FITB Consumer Staples= PG; KO; G; MO; CL Utlities= WCOM; CTL; Quest/LCI Energy= MOB;DO;TX Consumer cyclicals= DH; HD; WMT Hope this helps, Jay

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