Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 158.68

+0.3%

2:14 PM EST

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To: Ian@SI who wrote (7903)	6/5/1999 3:22:00 PM
From: Zeev Hed	Read Replies (3) of 10921

Ian, I wish I felt so strongly about the equipment makers as you do. My misgiving are rooted in the fact that in the last cycle, the chip makers gorged themselves and had capex that run above 30% of annual sales. No business can survive in this kind of capex environment, the profit margins are no big enough, even depreciation charges do not cover that kind of capex, simply because the depreciation period are often longer than the equipment life. I think that in the next peak, we will not see capex reaching such a high percentage of sales and thus assuming that the nadir of the next cycle will bring the stocks to twice their last peak, might be too much to hope for. Who knows, maybe the chip business will itself get into a goldilock economy one day (it is becoming the norm elsewhere is it not?), but until I see that happen, or at least a good case is made that this has a chance to happen, I'll keep my finger on the trigger, lightly. (VBG). Zeev

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