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

To: advocatedevil who wrote (44088)	3/20/2001 6:38:39 PM
From: Gottfried	Read Replies (1) \| Respond to of 70976

ad, at least she understands... >All this would strike most people as good reasons to sell chip-related stocks. But investors still are hoping to catch a turnaround in the chip sector, so they're holding onto their shares. Once those stocks start to swing the other way, they can rise very sharply, and investors apparently don't want to miss that ride up.< G.

To: advocatedevil who wrote (44088)	3/20/2001 7:05:21 PM
From: Proud_Infidel	Respond to of 70976

SmartMoney.com - Stock Watch This, Too, Shall Pass By Monica Rivituso THIS TIME last year, Ralph Acampora, director of technical analysis at Prudential Securities, stood before a luncheon crowd of chip-equipment investors in New York and delivered a presentation that sounded like a football coach's halftime speech to his winning team. It was March 21, and 11 days earlier, the Nasdaq had hit its peak of 5048.62. Tech could do no wrong — and chip equipment was no exception. Now, things look awfully different. A slowing economy, massive inventory corrections and a drop in demand for everything from telecom equipment to cell phones have sacked the technology sector for a 50-yard loss. So it's no wonder that there was little in the way of chip-equipment cheerleading at this year's SEMInvest conference. Instead, talk centered on things like industry deterioration and limited ``visibility'' (that's Wall Street speak for not knowing what your business is going to do next quarter — or next month, for that matter). Still, despite the industry's gloomy circumstances, analysts and company heads emphasized one point repeatedly: Things will get better. Chip equipment is a cyclical growth industry, pure and simple. At some point, it will grow again. For investors, the message was clear: Now's the time to invest for the next growth cycle. ``If any of you are sitting here expecting me to talk about the stagnation of the industry, you are going to be disappointed,'' said Ali Irani, a two-time Wall Street Journal All-Star analyst with CIBC World Markets. ``It's a great time for us to be looking at the big picture.'' Of course, it's one thing to foresee an upturn in this industry — and quite another to predict just when it will come. Forecasting this industry has never been easy, and these days it seems all the more difficult. But if the sector's excess inventories ease in the second half of the year, as expected, and if the Fed's rate cuts start to revive the U.S. economy's growth rate, industry watchers say companies could start ordering more chip-making equipment sooner rather than later. The key indicator for analysts is the sequential book-to-bill ratio (the amount of orders divided by the amount of shipments). A figure greater than one means business is expanding. Last March, the industry boasted a book-to-bill of 1.46, meaning $146 worth of orders was received for every $100 worth of products shipped. By January, that ratio had fallen to 0.81. If orders stop declining sequentially (a sign that the industry is pulling itself out of the downturn), that could represent an inflection point for chip-equipment stocks. And they certainly need one. Industry leaders such as Applied Materials (NASDAQ:AMAT - news), KLA-Tencor (NASDAQ:KLAC - news) and Teradyne (NYSE:TER - news) are down 63%, 61% and 72%, respectively, from their 52-week highs. According to Bear Stearns analyst Robert Maire, these stocks historically tend to anticipate industry trends six to nine months in advance — and he expects that to be the case this time around, too. If he's right, that means chip-equipment shares will start to turn before the cycle hits bottom. Of course, that's no reason to assume that the industry's turnaround is already at hand. And there could be many more rough moments to come. Take KLA-Tencor, which warned after the close on Monday that results for the March quarter would fall below expectations. Continuing weak semiconductor demand and slowing economic growth have caused companies to defer equipment orders, KLA's management said. Consequently, the company said revenue would be 8% to 10% below the $570 million to $580 million guidance given two months ago, while earnings would come in below the expected 58 cents a share. Chances are KLA won't be the last to lower expectations before this downturn is over. But despite the flow of dreary news, the seasoned management at the SEMInvest conference seemed anything but panicky. As Edward Braun, CEO of Veeco Instruments (NASDAQ:VECO - news), insisted at least twice over the course of the day, it's hard to imagine a future in which microelectronics or telecommunications will play a diminishing role. That may be a muted sort of consolation — especially compared to the rah-rah spiel of last year. But maybe that isn't such a bad thing.