Hi Jess, long time no see.
I'll try and answer just few of your many queries. First on the BTB, it is already a derivative of shipments (in essence) so as long as it has any negative slope, conditions are still deteriorating. To have conditions improve, you actually need a BTB greater than 1, and because of the huge decline in shipments (about 70% or more from the sales rate of the top shipping month) even a BTB above 1 could still be very low actual shipping rate. Yet, I think that the market is trying to time the through, and that is when the BTB derivative turns positive. With the recent BTB at .57, I think the market has decided that the next number must be higher and I believe the recent run up was in answer to "How much worse can it get?". That is my understanding of the market behavior, yet, looking at actual numbers, AMAT never got down under 20 (the last bottom was about 11, if memory serves), and the sales rate now at AMAT is not too far of what it was during that previous through, go figure.
I think that that the question is not "when the sector will turn", it has turned. Sure we are going to get some backing and filling. But short of the US market going into a deep recession (and count on Greenspan to do whatever is needed to prevent that), I would use retrenchments to load up. If you can get into AMAT and NVLS in the high 20' (which I still think is feasible), I think it is a good deal. I would also look at some secondary players like MASK and DPMI. I also like VECO (and at current prices, 27 to 30 I think it is a good deal). There are plenty of other companies that have been decimated and are still cheap, like CYMI (around 10 or so), WFR (special case with coming dilution, but still cheap if you can get in below 6). In the chip themselves, INTC and TXN are still the best safe bets, but you could get doubles in AMD, NSM, ATML and even LSI if they manage the Symbios acquisition well. Some of the graphic guys have been down on their luck, but TRID seem to be making a turn, and I would expect that even SIII will eventually turn after probing some sub 3 territory during tax selling season next month. Actually, right now, I prefer some of the chips on the equipment companies, and I like a little gamble like Rambus, it seems that their architecture is being pushed hard by Intel, and that will mean a lot of bottom line money for them.
Zeev
Zeev |
