Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (20672)	6/26/2001 10:24:23 PM
From: Jacob Snyder	Respond to of 24042

re: Because both currencies were equally "overvalued" this has minimal effect. "Buy low, sell high" is a good rule for companies, as well as investors. Contrast, for instance, the acquisition history of JDSU or CSCO on the one hand, and AMAT on the other hand. AMAT's management knows they are in a cyclical industry. They know how hard it is to forecast demand for chips over the useful lifetime of semiconductor manufacturing equipment. They know this inevitably leads to periods of alternating over/under-capacity, and they take advantage of the brutal and unpredictable cyclicality of their industry. They know that the price for assets in their industry will swing wildly from upcycle to downcycle. So, they hoard cash in good times. Later, when AMAT buys a small niche semiequip, that's a good sign of the bottom in the semiequip cycle. JDSU and CSCO don't do it that way. Not even close. Just like any investor, when a company says, "I need to buy this", they usually overpay. The basic problem is that JDSU and CSCO's management didn't understand they were in a cyclical industry. They will need to run their companies very differently in the future. And this cyclicality also has implications for the valuations that the stocks will have, going forward.