Steve,
I'm not an expert, but I have been following this industry very closely for some years now. NVLS and AMAT are among the top five in this sector when it comes to management, execution, and technology. They are superb companies. With respect to stock price, I'm as shocked as anyone else by how fast and how high these stocks have come at the first hint the industry was recovering. In past cycles, it has taken quite a few months of a book to bill over one for the stocks to get to these levels. With the advent of the web, it seems this sector is now followed by many more investors than it once was and these investors caught on to how much these stocks can appreciate from trough to peak. That is the only way I can explain the incredible recovery in stock prices, before business has become really good again. Although the stocks have gotten ahead of themselves on a fundamental basis, I don't expect to see them become bargains again barring a market collapse, or another Asian Flu type episode. There should be some healthy corrections along the way, but the trend is most definitely up as long as industry bookings continue their trend.
IBM will not buy NVLS. IBM has never shown an interest in supplying semiconductor equipment despite developing some pretty cool stuff. I don't know what IBM is going to do grow their hardware business, but semiconductor equipment is definitely not part of the plan. Computer services is actually a pretty profitable business. I don't know how they will grow the hardware side of their business.
Bob |
