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To: Starlight who wrote (20033)	4/9/2001 10:25:26 PM
From: Darth Trader	Respond to of 60323

I have been watching analysts for many years and they tend to talk down stocks when they don't want you to buy, (while all the time they are buying) and they put buy rec on stocks when they are in the process of selling. Rather simplistic isn't it?

To: Starlight who wrote (20033)	4/10/2001 8:06:21 AM
From: Road Walker	Respond to of 60323

Betty, re: Of course, chip stocks might have already discounted this idea, and why should we listen to analysts anyway? Why weren't they telling us to sell chip stocks several months ago instead of now when they've already dropped into the basement? If you were talking about the interview with Dan Niles, I saw it also. Semiconductors have always been (and will probably always be) cyclical. Part of the problem is lead time for production facilities, it takes about two years to build a new Fab. So the companies have to project demand two years out based on current demand, when demand is strong you can bet they will over-commit to capacity and there will be a glut of product, lower prices, and lower gross margins for manufacturers. Then nobody can afford to build capacity, demand catches up, and you have the under-capacity situation we had from mid-99 to mid-00. As far as the analysts, SSB's J. Joseph called the top in the semi cycle last summer, and was roundly criticized on these threads (by me and many others) and by other analysts. At the time, everybody was talking about 4th quarter shortages, so the call was gutsy and prescient. Most analysts, however, turn the most negative when the demand curve is flattening at the bottom, we are probably close to that point right now. And that has proved to be the time to buy semiconductors, even if you have some loss in the prices before the eventual turn. Here is a chart of the semiconductor index. Note the similarity of the current downturn to the ones in 95-96 and 97-98. stockcharts.com[h,a]maclyymy[pb50!b200][vc60][iUp14,3,3!La12,26,9] (I'm not an expert on the semiconductor stuff, for a better perspective on the cycles hang out on the AMAT thread for a while.) John

To: Starlight who wrote (20033)	4/10/2001 9:03:37 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

The analyst problem, as usual, is grouping every type of semiconductor chip into one category to make the analysis easier to understand (but invariably wrong). Looking at the demand for microprocessor chips and DRAM--two types of semiconductors that find heavy use in desktop and portable computers, there has been a drop in demand. Looking at flash memory, there has been a drop in the RATE OF INCREASE in demand. That is, demand for flash memory is still increasing at a rather strong rate, but it isn't quite as strong as it was a year ago. In 2000, OEM camera manufacturers were worried about adequate supplies of flash memory, so it appears they ordered more than they needed to make sure they had enough. Then late in 2000, as growth in demand for digital cameras subsided, the camera manufacturers were caught with too much inventory and probably cancelled ongoing orders to adjust their own inventory, leading flash memory producers to make similar cutbacks and inventory adjustments. The point is that overall demand for flash memory chips is increasing, and in fact is the only really healthy segment of the semiconductor sector. By grouping all semiconductor companies together, analysts are missing some rather good investment opportunities in the strongest growth part of the sector. It seems to me that the three companies which are able to benefit most from flash memory are Toshiba, SanDisk, and Advanced Micro Devices. Only SanDisk is the pure play here, as any earnings increases in the other two would be dwarfed by the rest of their business. AMD appears to be taking a commanding position in embedded memory, particularly for applications in set top boxes, routers, cell phones, etc. But revenues from these sources are still small compared with AMD's microprocessor business for the PC market. Art