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Technology Stocks : LSI Corporation
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To: shane forbes who wrote (14879)9/10/1998 11:05:00 PM
From: Grand Poobah  Read Replies (1) of 25814
 
//OT re: semi-equips
Shane,

I think WJ's semiequip operations are in big big trouble.
SFAM (maybe)
FSII looks like they are having serious problems with cash flow
and for whatever reason I have never been a fan of LRCX)

I am curious about your reasons for including SFAM on the list. They are a stock I have been following since they were at $12 in 1997. My interest in buying them and my having available cash have not yet coincided to this point, but they always seem to be around the top of my list somewhere because I think CMP is going to do well in the next few years.

When I look at them now, I see a company selling for $9/sh that has a book value of about $18/sh and cash of around $8.75/sh. It is true that they are experiencing negative cash flow right now, to the tune of about $7-10m/qtr., but at that rate it will take a while to dissipate $140m. Lehman Brothers rate SFAM a buy with a long-term target of $55 and said at the end of July that "we think SpeedFam will be able to maintain or slightly increase its CMP market share" referring to FY1999. This does not seem to me to be a company that is in imminent danger of collapse. I know there is concern because some of their biggest customers are Korean and because of fear that AMAT may be eating away their market share. I had set a buy target of $23 several months back, but reconsidered that when the semi-equip intermediate-term future started to look more dismal. At $9 this stock is looking a lot more attractive to me, if and when I have some cash lying around. However, I am definitely concerned that I not buy into a collapsing company and am curious to hear your thoughts on it.

Regards,
G.P.
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