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

To: Ian@SI who wrote (42307)	2/17/2001 3:34:37 AM
From: advocatedevil	Read Replies (3) \| Respond to of 70976

Ian, RE: "If you're going to short the leader in the sector with the best margins and the best long term track record, I would have expected you to have a better understanding of the industry and cycle fundamentals than portrayed in that last post." I should first state that I believe AMAT is a great company. I agree they have top notch margins and a solid track record. They're also gaining market share in a growth sector and I fully expect that those who are holding long term will be rewarded. I will buy AMAT for the up-cycle when the time is right. I don't believe we've reached that point quite yet. As far as the cycle goes, I think it could be easily be argued that the bottom for AMAT (in terms of bookings) may not occur until the end of this year. If you believe that the stock price often bottoms a few months prior, then it may be worth waiting before buying. In my case, I'll play it short in the mean time. I think it's also worth noting that AMAT is hardly undervalued at current levels. RE: "Or at the very least, I'd expect you to have an argument explaining why those who are proceeding with or even accelerating their 300mm, Cu and 0.13µ plans would all of a sudden be "unwilling to spend the big bucks". Start with the reason why Foundries will give up Leading Edge market share; then explain why the advanced logic makers will let their competitors take an overwhelming advantage; then you can finish up with the reasons for Infineon stopping its efforts after spending almost 3 years establishing a technology lead. " Don't get me wrong, these new technologies are the future and spending will continue to increase at a fast rate. Even better for AMAT in the long run is the high probability that they will pick up market share in the process. Let me be clear, I don't expect the semi leaders to curtail spending in this area for the same reasons you outlined. Evidence clearly points to the opposite. But hear me out: What about the second and third tier semis? It costs plenty to purchase and maintain new equipment. It takes longer to implement new technologies and then get a return on the investment. I believe it will be difficult for these folks to justify the expense today, when demand is slowing and capacity is rising. I think those folks will put plans on hold for awhile. Then you have to ask: Will the growth in new technology sales be enough to counter the slowdown in current technology sales? I believe the answer is yes and no, depending on how far you look out. Most will not be adding capacity at this time and not everyone can afford to spend when revenues are dropping. I'm only looking out through the end of this year and I don't believe it will be enough to keep bookings from going lower during that time frame. AdvocateDevil

To: Ian@SI who wrote (42307)	2/17/2001 12:45:25 PM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 70976

>>Start with the reason why Foundries will give up Leading Edge market share; then explain why the advanced logic makers will let their competitors take an overwhelming advantage; then you can finish up with the reasons for Infineon stopping its efforts after spending almost 3 years establishing a technology lead. << I think this is where you and I part ways, Ian. The need for constant technology upgrades is as old as Moore's Law. But so are semiconductor industry cycles. The first does not preclude the second. By your logic, the 1996-98 downturn should not have happened. But it did, and it was one of the most severe in the history of the industry. It is very difficult to decide to spend $2 billion plus on a new fab when the fabs you have are operating at a loss due to overcapacity or a demand slump. As you know, I don't invest in semi equips for conflict of interest reasons, so I'm not going to comment on whether shorting AMAT is a wise decision or not. I do think, though, that it's extremely unwise to wave the technology upgrade wand as the magic cure to all the industry's problems. Katherine