Scott,
I made that one sentence observation, "we are in dire trouble indeed", which was my thinking after I finished the complete article, both Part 1 and Part 2. The words used by the reporter, Frances Hong, and the references made to other "entities" quoted in the article, were at best "nuetral", or off the mark, or left many factors out which put a different "spin" on what the situation is in the semi-equip area. I will attempt to summarize some of my impressions from the article as follows:
Part 1
1. Reference is made to the size of the PC market <<"Investors should also keep their eye on the PC market, which still remains a big part of this group’s bread and butter.">> Is this true?? I have been reading many articles where this is the big difference between now and 1995 and 1997. I have read where the PC market is down to taking about 25 percent of the chips now and that percentage will be shrinking even further in the future. The article goes on to say <<"What’s critical now, is that the PC market rebound and be on track in the second half," says Donaldson Lufkin & Jenrette analyst Milind Bedekar. "That’s important for this sector to do well.">> My comment is - Really?? Is this representative of what all analysts think? Personally, I think it would have very minimal impact on the semi-equips whether the PC market is good or bad in the second half. There is not going to be a halt in building fabs if the PC market is "soft" for 6 months. But it doesn't matter what I think - but if this analyst is representative of his peers "we are in dire trouble indeed"
2. Another dubious statement <<"Cautious investors, of course, want to know how far into the cycle these stocks are and if it is too late to get in the ballgame. Rest assured: According to a number of analysts, it is just about past the midway point in term of this sector’s cycle, or the fifth inning.">> Really?? All the analysts have it pegged that closely? I submit that it is far too early to know when it is going to end, and furthermore the cyclic nature of this ending will not occur like 1995 and 1997 - the market is much more complex and broader in base than those previous cycles. But again, I don't count, but the analysts and others who guide the perceptions of the market do count, therefore "we are in dire trouble indeed".
3. Here is a beauty - see if you can make sense of this. <<"But Chase H&Q analyst Eric Chen says that there has been too much emphasis on the effect that wireless and communications can have on the sector.
"The PC and DRAM markets are still a big piece of this sector’s market," Chen says. "It represents 50 to 60 percent of the industry. That’s why the capital-equipment space is underperforming -- because there has been too much emphasis on the connection with wireless. In fact, wireless is driving the volatility in the tech world."">> I am not sure what this means, but it can't be good. Personally, I don't agree with the 50 to 60 percent, but again it is not what I think - if the analysts believe this "we are in dire trouble indeed".
4. AMAT - here are some excerpts - <<"If Applied Materials isn’t working, the whole group doesn’t work," Pitzer says. "This stock is a top pick, an you tend to buy and sell this sector as a group."..... Although Prudential Securities analyst Shekhar Pramanick has a "strong buy" rating, he cautions that investors should at least have a nine-month outlook on the stock. In other words, there is no quick money to be made on shares of Applied Materials". Really?? AMAT closed at 67.75 today. It closed at 94 on 7/17, just 14 trading days ago - a loss of 28 percent. Nine months is a long time to have "dead money" invested in the market.
5. Only 3 other stocks besides AMAT were mentioned as "good stocks" to buy.
Part 2: Stocks to Watch with Caution:
1. I like these paragraphs <<gg>> - <<"Although Chen has a few favorites in the sector, he thinks that the semiconductor capital-equipment group is stuck in a trading range. There is still a good part of the ballgame left, but investors will definitely want to be out before the sector’s cycle peaks, by the end of 2001 or early 2002, he says.
"Prior to the April time frame -- when tech stocks came crashing -- every piece of good news was built into many of these stocks," Chen says. "In an environment where the economy seems to be slowing a bit and there’s high production growth, we’re seeing some moderation of demand."
Chen agrees that the stocks are oversold, but he also thinks the group isn’t out of the woods just yet. Until there is some indication of cycle acceleration, such as an increasing book-to-bill ratio, the stocks in this group will continue to tread water.
So which quarter should investors stay tuned to? You don’t wanna miss the fourth quarter. Although this year’s fourth quarter won’t be the end of the ballgame either, Chen says the period is critical. "If acceleration doesn’t take place by then, it will be tough for investors to get back in," he says.">>
I don't know what to say, but if the analysts believe and promote this thinking " we are in dire trouble indeed".
2. KLIC I love this quote - "<<It isn’t a household name and probably won’t be anytime soon, for that matter, analysts say.>>" In other words, nobody pays much attention to the stock??
Then we have the following observation(s): "<<The company’s sequential revenue growth for the fiscal third quarter ended June 30 slowed significantly. A large portion of its orders come from contract-packaging houses. Kulicke & Soffa reported Thursday that it is delaying some shipments that could affect near-term results.>>
In summary, Scott, if the above thinking is representative of the "investment community", and I think it is based on the results of stock prices during the last several weeks - "we are in dire trouble indeed"
Cheers,
Don W. |
