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

To: StanX Long who wrote (54639)	10/25/2001 12:07:57 AM
From: StanX Long	Respond to of 70976

Monday saw the group, especially the chip equipment companies like Applied Materials (AMAT), KLA-Tencor (KLAC), Novellus (NVLS) and Teradyne (TER), post sizable gains (7% or more) in response to rumor that Intel (INTC) would cut its capex spending by between 10% to 20% v. 30% feared by many. Updated: 24-Oct-01 General Commentary Chip and chip equipment stocks drifted for most of the session, as reflected by the slight 4 point loss in the Philadelphia Semiconductor, or SOX, index... Sector's behavior over past several days has been a little strange to us, as we can't understand the excitement over the capex reductions projected for next year... Monday saw the group, especially the chip equipment companies like Applied Materials (AMAT), KLA-Tencor (KLAC), Novellus (NVLS) and Teradyne (TER), post sizable gains (7% or more) in response to rumor that Intel (INTC) would cut its capex spending by between 10% to 20% v. 30% feared by many... Though Intel later denied the report, investors now seem to expect more modest cuts in spending... A Reuters report Tuesday, however, noted that research firm IC Insights projecting a 25% reduction in capital spending in FY02, with Intel posting the biggest drop - 40%. Briefing.com doesn't know whether spending will be reduced by 20%, 30% or 40%... One reason for that is that the chip companies themselves have little idea how good/bad business will be next year, as most are opting not to provide guidance beyond Q4... Global economic conditions are simply too fluid for accurate forecasting. What we do know, however, is that economic conditions are soft and show no signs of recovering in the immediate future... We also know that (in general) sales and earnings growth continues to decelerate... With layoffs mounting, the economy faltering and consumers buckling it seems imprudent to make an investment which requires the best-case scenario in order to pay-off. Consequently, we look for the recent advance in the chip sector to short-circuit in the days and weeks to come... Considering the Nasdaq often follows the SOX, that's bad news for the rest of the tech sector as well. After the close, AT&T (T) and Amazon.com (AMZN) reported results that were in-line with expectations... Fairchild Semi (FCS), Allegiance Telecom (ALGX), Citrix (CTXS) and LSI Logic (LSI) among those firms beating estimates, while Oak Tech (OAKT) and Compaq (CPQ) missed their numbers... For all the post-close/pre-open earnings info please see Briefing.com's Earnings Calendar and/or In Play pages. -- Robert Walberg, Briefing.com