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Technology Stocks : Silicon Valley Group
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To: Lafayette who wrote (1841)9/27/1998 7:40:00 PM
From: FJB  Read Replies (1) of 2946
 
RE:The future rebound sounds encouraging, but what about the talented employees who are scheduled to be laid off in the next rumored RIF? Who will be available to produce the new machines?

The problem with semiconductor downturns is that very few new machines ship. Therefore, you simply can not pay people to do nothing in the manufacturing department. Interestingly, European and Japanese manufacturers probably do not layoff work forces even while bleeding cash. On the financial side, this might weaken these foreign companies during a prolonged downturn, but they are probably better positioned for the initial stages of the upturn.

Does anyone have any data on US market share of the semi-equipment industry for the last 15 years? This may provide a clue as to whether the American way of handling downturns is the better method. Instinctively, I'd say you are better off keeping the people for a short downturn vs. a protracted one(the current scenario). Also, in a cyclical growth industry like semi-equipment, you are probably better off keeping the people. There don't seem to be any easy answers here, but considering the severity of this downturn, I think SVGI has probably made the correct decision.

BTW, where did you hear the rumor of another workforce reduction?

Bob
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