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Politics : Formerly About Applied Materials

AMAT 231.46

+2.8%

9:42 AM EST

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To: Paul V. who wrote (26572)	11/20/1998 10:47:00 AM
From: blake_paterson	Read Replies (1) of 70976

Paul: Interesting read in Jubak's Journal today: moneycentral.msn.com Excerpt: <<Capital spending projected to fall Finally, while a pickup to 75% capacity utilization is certainly an improvement, it's probably not enough to produce much in the way of new equipment orders for companies such as Kulicke & Soffa and Applied Materials (AMAT). The consensus on Wall Street (I've seen this number in reports from both BancBoston Robertson Stephens and Prudential Securities) is that it takes 85% utilization to spur new equipment orders. Below that level, companies simply don't feel much pressure to buy new manufacturing gear. Nor is the transition to denser chips going to add as much to equipment company revenue as once seemed likely. Intel, for example, recently told Wall Street that it thinks it can re-use about 70% of its existing equipment when it moves from 0.25 micron chips to the smaller 0.18 micron level. Based on these numbers, Prudential Securities is projecting that capital spending for the chip industry will fall by 20% in 1998 and an additional 15% in 1999.>> Regards, BP

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