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Technology Stocks : Semi Equipment-Sell when they're singing in the streets -- Ignore unavailable to you. Want to Upgrade?

To: Alan Gallaspy who wrote (120)	5/26/2000 3:31:00 PM
From: Ian@SI	Respond to of 276

Alan, I'd add that the BtB number released was: 1. Preliminary. 2. Showed sequentially higher Sales 3. Showed sequentially higher Bookings i.e. We can expect progressively higher numbers next month with the revised numbers and the following month with the final tally. A BtB > 1 simply means that backlogs are continuing to increase. So far, based upon the conference calls I've heard, customer requested delivery dates are generally being met. However, IMO, the BtB must come down closer to 1 in order for the current growth to be sustainable. I think the last number shows another spurt in growth as the DRAM makers join the party that the rest of the chip makers started last year. I tend to agree that by July, we'll probably be wondering what all the fuss was about. FWIW, Ian. re: Maybe I just can't see the doom and gloom that surrounds announcements of Book/Bill declining by a tiny bit ...

To: Alan Gallaspy who wrote (120)	5/26/2000 8:04:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 276

I believe that most forecasts for th semi yearly shipments this year is around $180 B worldwide. The current booking rate indicates that cap ex expenditure (with a lag, I am not sure how to calculate) is going to be $40 B annually (at $2.5 B per months equipment makes $30 B and since equip traditionally is only 70% of total cap ex in the sector total cap ex is $40 B). My worry is that this rate is not sustainable and the industry must catch its breath. While here not much of the cap ex is bank financed, in SE Asia, almost all of it is bank financed, and since interest rates are going up (and Hyundai is running into troubles with its bankers, who is next), maybe we will have a slow down. I wonder if we could have an unusual event in which the cycle is actually lengthened by a six to 9 month "breather" in between (allowing possibly world sales to reach a shipping rate closer to $220 B, so that $40 B will be less than 20% of sales). Right now, with AMAT having broken badly its April lows, rallies should, IMHO, be suspect, but if we recover, I believe that we will not see in this cycle (normal or modified) a breach of the high set earlier this year. AMAT's valuation was more than 4 times what it was at the peak of the last cycle, and these is no way that AMAT shipments are going to be four times the shipping rate at the last peak, not even close, IMHO. I believe that the excess valuation was simply caused by excess liquidity and "comparative shopping", namely would you rather pay 200 trailing earnings for a networker or 50 trailing for a semi equip. The standard answer is the latter is cyclical and the former is not, fine, but the differential was still too high so money flowed into AMAT as well making it as overpriced as the JNPR, CSCO etc. Of course, if excess liquidity and the associated "bubble mania" returns, the same comparative shopping will cause revaluation of AMAT as well. I expect a strong summer in general, but no new highs for the semi-equip. It still leaves room for a pretty good "trade". Zeev