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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 231.01+8.3%Feb 6 9:30 AM EST
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To: Herschel Rubin who wrote (6327)7/23/1998 9:14:00 PM
From: MarkFin  Read Replies (1) of 10921
 
Herschel,

Many of the medium size equipment companies that I am aware of have cut 25-35% of their workforces through phased reductions. The main problem is that capital equipment manufacturing requires an infrastructure to engineer, manufacture and support the product. Normally, equipment companies have a hard time staffing up quickly enough to support the fab construction cycle so we typically run lean. This is also why profits are strong during the growth cycles. When the slowdown hits, our sales opportunities dry up very quickly. Remember that the order cycle is a 5-6 month process so it takes about that long to burn through the backlog. After that, it doesn't take too long before we cannot fund the infrastructure we just put into place (including our new process labs full of the expensive equipment required to sell the product). Then we quickly cut into a lean, highly skilled work force to keep Wall Street happy. It is one vicious cycle.

MarkFin
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