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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (9961)	6/11/2001 9:32:25 PM
From: WTSherman	Read Replies (1) \| Respond to of 10921

OK, the tax discussion is a lot more interesting than the advertising discussion... Nonetheless, anybody care to talk about semiconductors? My take on the current state of affairs is that the recent general tech rally and the more dramatic semi rally were premature market ejaculations, so to speak. I think its starting to dawn on a lot of folks that there is no near term reversal coming for the U.S. economy and that much of the rest of the world is heading for the same kind of economic performance that the U.S. has seen for the last 2 or 3 quarters. It seems to me that the primary reason for this was a total disregard for the effect on other economies that a slowdown in the U.S. would have. Corporate executives were as guilty as the anal-ists in that regard, talking up their overseas prospects as a savior for their declining U.S. sales. All of this is very ironic since both anal-ists and execs have spent the last five years babbling incessantly about the "globalization" of the worlds economies. Well, if there really was a globalization that had taken place how could a dramatic slowdown in the biggest component of the "global economy" not have serious ripple effects??? Bottom line is that I doubt there will be any significant improvement in corporate earnings for at least another year as overseas sales wipe out any modest upturn in U.S. business that occurs. SOXX may be headed for 500 in fairly short order...

To: Zeev Hed who wrote (9961)	6/11/2001 9:46:50 PM
From: Ira Player	Read Replies (1) \| Respond to of 10921

This causes "mis allocation" of capital It depends on how you look at it. Let's create a fictional corporation that has an excellent credit rating (because it has no debt), has very good cash flow from a rapidly increasing sales of proprietary piece of software, but the stock is getting no respect. It is selling for a trailing PE of 10, PS of 1, while generating gross margins of 80%. Given this scenario (if you find it, PM me please...lol) if makes very good sense to: 1. Use cash flow to buy back stock. 2. Borrow against that great credit rating to buy back stock. If the purchased stock is truly retired (not held as treasury stock, but retired), the earnings per share could actually improve by borrowing at 8% while buying back shares that are getting 10% (PE ratio of 10) against the earnings. It's not always a "mis allocation" of capital. When the market realizes what the 'real' value of our hypothetical corporation is, the stock price will follow. When the PE is where it should be for this wonderful, but well hidden (from me at least) company, say around 40, it should reissue some shares and pay off the 8% debt with the newly minted 2.5% (earnings) shares. Ira