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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (4047)	3/22/2000 12:19:00 AM
From: MikeyT	Respond to of 5867

Disappointing day for LRCX. Has the conference in NYC started yet? Mikey

To: Proud_Infidel who wrote (4047)	4/7/2000 9:25:00 PM
From: Jong Hyun Yoo	Read Replies (1) \| Respond to of 5867

Some general comments about the tech market and relative strength of LRCX compared to others. Portfolio Strategy Update) Technology, Nasdaq leadership on hold for several quarters, Summary The aggressive rotation out of technology and out of the NASDAQ should subside gradually over the next few days. But we do not expect a resumption of broad-based technology leadership for several quarters. Therefore, despite the sharp decline in prices over the last few weeks, we are maintaining our cautious stance in this sector. The basis for our view lies in fundamental, seasonal, psychological, and transactional developments within tech and the general market. First, the fundamentals. Our deconstruction of fourth quarter results (March 13 Portfolio Strategy) revealed that the technology sector increasingly resembles the broad equity market in the selective distribution of robust revenue growth and robust revenue acceleration. This indicates that the global economic recovery may have been a key factor in the sequential improvement, rather than any new economy dynamics that were peculiar to technology. The global economic recovery is just as positive a factor for other areas as it is for tech. This casts doubt on the scarcity value of momentum in the technology sector. Competition for the growth investor's dollar is emerging in other areas, such as consumer cyclicals (which has aggregate characteristics similar to tech), and parts of the energy sector. Once there is a positive incentive to rotate funds into other groups, money rarely returns to the old leadership short run. In contrast, routine profit-taking generally leaves overall leadership unaffected. The unfortunate timing of the breakdown of negotiations in the MSFT antitrust case raises other questions about some of the concepts supporting money flows into tech. The court opinion raises questions about the value of a monopoly and indirectly raises doubts about the value of the first mover advantage. Second the seasonals: seasonal properties are not as positive for the second and third quarters as they are for the fourth, which falls immediately prior to the large, tax-related seasonal mutual fund flows. Fourth quarter corrections in technology are often arrested by the seasonal buying of equities. Third, the psychological. Once traders have lost money faster than they made it (roughly 34% of tech shares are down at least 50% from their Q1 highs), speculative fervor dies quickly. The perception of riskless, easy money is essential to maintaining a speculative psychology. Speculation generally does not reappear in a new area, in part because of the depletion of buying power resulting from point number four. Four, the transactional. The NASDAQ market has dropped far enough to impair the buying power of margin debt that was assumed in January, February, and March. Two other large tiers of debt remain from November and December. Some of the speculators that have received calls recently will end up owing money to their broker-dealers. They will not be able to return to the buy the dips, thus incrementally reducing the pool of potential buyers. We doubt that this correction will be a threat to the overall economy unless it migrates to the S&P 500 and the DJIA, and expands to a 25-30% decline (with no meaningful rebound). The correction slightly reduces the prospect of short-term Fed action, which raises the odds of continued economic strength. The only three technology subgroups that display profoundly positive top line growth characteristics are semiconductors, semiconductor capital equipment, and communications equipment. This indicates that demand in these groups is being supported by positive secular catalysts, thus conferring a resilience on their results and an increased likelihood of additional positive surprises. Our earlier work has identified AMAT, CY, DS, KLAC, LRCX, XLNX as particularly strong players in their respective niches. N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION may have, within the last three years, served as a manager or co-manager of a public offering of securities for or makes a primary market in issues of any or all of the companies mentioned. Closing prices are as of April 4, 2000. Applied Materials (AMAT, $98.12, Buy)* Cypress Semiconductors (CY, $45.00, Buy)* Dallas Semiconductor (DS, $37.75, Buy)* KLA-Tencor (KLAC, $79.62, Buy)* Lam Research (LRCX, $40.94, Buy)* Xilinx (XLNX, $77.09, Strong Buy)* * Followed by a different CSFB analyst.