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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Katherine Derbyshire who wrote (33617)	12/30/1999 5:18:00 PM
From: Tony Viola	Respond to of 70976

Of course you are right about how many of them (Intel, LSI or AMAT) correctly predicted this most recent downturn. None. But the industry is hard to predict. E.g., the recovery was late by a year because of the Asia meltdown, they all said, and that was hard to see coming. but non-PC semiconductors seem to be rocketing I also think Intel will announce in their post 4Q99 CC that they were production limited in microprocessors and flash memory during the quarter. They have announced some X-budget plant expansions recently. Question: do you think that semis can get out of the cyclical category and become pure growth in the foreseeable future? Seems so, since everything needs semiconductors nowadays, more than ever. DRAM might be the last chip type to have cyclicality, because it is so commodity-like. Tony

To: Katherine Derbyshire who wrote (33617)	12/30/1999 5:58:00 PM
From: Duker	Read Replies (1) \| Respond to of 70976

More on Worry: I worry about the sustainability of the junkies' fix provided by the '100% to 200% to 300% per year compounded-do-no-wrong-visionary-venture capitalists.' What will they invest next year in technology start-ups? $30 billion (up from ~$24bn this year)? A solid slug of this cash will purchase silicon housed in steel/plastic/magnesium cases. Is this really a sustainable situation? Will the VC's clients' returns continue? Why is there so much cash chasing these astronomical returns? At the margin, are these endowments and pension funds that are funding @adVentures.com Fund MCMLV that bright? Or, are these the same lemmings who believed that commercial real estate 'had a lot more room to grow' in 1986? Is this truly a virtuous cycle or is this just a bizarre situation where piles of free-flowing money are being inefficiently allocated into businesses where the actual returns have little-to-no chance at resembling expected returns? I recall a comment on a conference call or two discussing the sustainability of the current SemiCap upturn. To paraphrase, this upturn is 'better' than the last because we are not seeing sovereign investment like we saw with Korea in the last cycle. I would argue that it is not from whence the 'cheap (doesn't require returns per se)/dumb (doesn't understand risk or what realistic returns)' money comes, but rather that it is cheap and dumb money in the first place. The Kleiner Perkins, @ventures, Polaris folks are obviously brilliant. The money that they are raising, IMO, is considerably less so. People throwing large amounts of money into the delicate, inventory-buffer-ladened, cyclical food chain of semiconductors (be they communications, PC, or automotive ICs) can only ultimately cause tremendous difficulties. Perhaps, this time it will be different? --Duker