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Technology Stocks : Kulicke and Soffa -- Ignore unavailable to you. Want to Upgrade?

To: scott_jiminez who wrote (3789)	5/19/2000 9:30:00 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 5482

Scott, Jerome and Others, I tried to make some sense of what has been happening to KLIC and other stocks in the semi- equip universe the last several weeks, but I have failed. I cannot figure it out, but I do have a theory, that may help a little, which I will try to write up and present later in another post. In the meantime, I have put together 2 tables which present some data for the semi-equip action this week, and for the action since this year's NASDAQ low made on 4/14. The first table is shown at: Message 13743067 The table shows this week's percent change, next year PE, and sum of next 2 years earnings. The table is sorted by next year's PE in ascending order. KLIC occupies top spot in this table - it isn't even close. With today's close, KLIC's next year PE is 9 - second place in the table is IMSC with a next year's PE of 13. Why KLIC lost 16 percent this week is beyond me! The second table is shown at: Message 13743280 This table has the same columns as the first table, but the comparison period of performance is from 4/14 to today's close. Also, the table is sorted by price percent change over that period. I was really surprised by the tremendous variation of price percent change over the period shown in the table. Both the SOX-X and the NASDAQ are up over this period, while the semi-equips are down. Sorted in this fashion, by price percent change, shows the other 2 columns to have no correlation that I could discern. Both the NVLS and TER positions at the high end of the table would seem to make some sense, but most of the stocks in the lower part of the table, including KLIC, would seem to make no sense. Don W.

To: scott_jiminez who wrote (3789)	5/20/2000 2:50:00 AM
From: Red Dragon	Read Replies (1) \| Respond to of 5482

To ALL: here are my devil's advocate rebuttals, FWIW: 1) I completely agree that IF the projected earnings for the next year or two come through, then KLIC is very attractive at these levels. But what if those numbers are too optimistic? Analysts screw up all the time. Insiders know the industry better than analysts, and they don't seem to be as optimistic (details below). I agree that most insider sells are not significant. Insiders at Microsoft and Cisco sold steadily throughout the 90s, and it certainly did not portend doom. However, the amount they sold was typically a small percentage of their holdings. In my experience, whenever I see several insiders selling more than half their holdings, it's bad. See below. 2) The main lesson from Gottfried's charts is that stock prices peak well before the business does. It confirms very graphically what is already well known among investors. The charts don't predict how long this cycle will last. I've made a lot of money over the years playing my two favorite cycles: semiconductors and the Christmas/retailing cycle. The critical lesson to learn is you MUST get out several months before the actual peak of the business. Check out this chart of eToys. Did the stock push higher in December when orders were pouring in at record numbers? Was there a runup in January, prior to their earnings announcement for their spectacular winter quarter? Nope, the stock had peaked well before then. quote.yahoo.com (Incidentally, I think eToys will be a nice short term trade this season once again, as it has plunged to about $6 a share. I would suggest to you all to pick up some shares this summer at $4-$6, and you are likely to see a nice pop as the Christmas season approaches, probably 100% or so as it pushes to at least $10-$12. Once again, you MUST get out by November at the latest!!) Thus, in summary, I think everyone who is still long KLIC must ask themselves these two questions: 1) If you believe the premise that stock prices peak well before the business does (perhaps 6-9 months for semiconductors) - then do you believe the actual peak of the semiconductor market is still many months away? Please take into account the presumed global slowdown as interest rates head higher in the US/Europe/Asia, all the fab capacity added last year and this year, the fact that Microsoft and others are warning of sluggish PC sales, and the fact that current semiconductor sales are an absolute record blowout. Can it get even better 6-9 months from now? 2) You must also ask yourself why: Chairman and CEO Kulicke sold half his holdings at $70 CFO Sprague sold 96% of his holdings April 24-25 at ~ $71 Senior VP Leonhardt sold 95% of his holdings April 26 at $76 Senior VP Salmons sold 93% of his holdings April 24 ~$71 Executive VP Perchick sold 33% of holdings on April 26~$76 Director Page sold 98% of her holdings April 25 at $75 Director Osteen sold 100% of his shares May 1 Director Kulicke (different person) sold 100% on May 1 Insider Shareholder Zadel sold 93% of his holdings April 25 Insider Shareholder Striplin sold 100% on April 27 SI Investor "Red Dragon" sold 100% on May 3 :-) These are not just a "few" insiders - it's a Who's Who of the executive staff! Everyone who is still long KLIC must ask themselves if they should still hold the stock, when these insiders aren't anymore. Once again, here is the link to the gory details: biz.yahoo.com Conclusion: If the general market improves, KLIC will move higher, just like most stocks. However, IMHO, I don't think we will see another new high of $87. These insiders seemed to be very happy with prices in the $70 range. Don't get emotionally attached to any stock. Don't stick around too long with cyclical stocks. Once again, I'm in the medical field, and have no particular insight as to what will happen with the semiconductor cycle or stock price. I'm just using the chart data and insider data to draw my conclusions. It will be fascinating to revisit this in 6-9 months. If I'm wrong, then at least I'll have good company (all the KLIC insiders). KLIC will eventually drop to the teens during the bottom of the cycle, and I'll be back diving in with both feet. Folks, don't forget to consider the eToys play!