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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: XBrit who wrote (2932)	11/4/2001 6:45:12 AM
From: Zeev Hed	Read Replies (3) \| Respond to of 99280

Julius, I believe that you are quite right, and the sudden surge in KLIC was more of an indication of the end of a move than its beginning. I fear that analysts looked at the relative value (price to book) of KLIC to the rest of the industry and decided, "it is cheap" at what was less than two times book at $14. However, those guys forgot that out of the $7.5 of book value, almost a full $5 is goodwill. Furthermore, KLIC is slowly starting to " over leverage itself". Last month it sold $125 MM in convertible debt, and while by itself, that sale was quite smart (just like the recent convertible of NVLS and LRCX), their debt load is going to be in the neighborhood of $450 MM, with sales rate running at about $600 MM per year, it is getting a little "excessive". Zeev

To: XBrit who wrote (2932)	11/4/2001 12:27:06 PM
From: lh56	Read Replies (1) \| Respond to of 99280

julius, thanks for response. good input. larry

To: XBrit who wrote (2932)	11/6/2001 9:05:13 PM
From: Alex MG	Read Replies (2) \| Respond to of 99280

FYI regarding KLIC if you are still short, from a source of mine... I have to admit the huge recent volume does raise a red flag. "Alex... Welcome back. I don't know if you were able to watch KLIC's climb last week, but watching the tape, it was not action that I would attribute to either the general market rally or to fundamentals, especially the last day when almost 10mm shares were traded. Something is going on, and I believe it is related to a buyout. I first heard that KLIC was for sale (very reliable source) a little over 2 months ago, and have pretty much left it alone since then. I shorted when it approached 17 late last week, thinking it was far overdone but then volume increased above an already extreme level, with large blocks coming in everywhere. I did not think think this looked like short covering, and bailed out the next morning to break even. Checking around, I learned some other things late this weekend that make me think something is going on, and if so we should know pretty soon. Fundamentally, there is little improvement in KLIC - they received one good order, and everyone got excited, but the truth is more like what CHPC (a good customer of KLIC) said in their conference call last week - they have no need to buy any bonders until well into next year. It will be a long time before any meaningful recovery in earnings arrives at KLIC. I cannot see much premium over current levels even in a buyout, but there could be some. I came up with a short list of potential buyers (there are not many that both can and would want to), and the most likely candidate is not very much into the sector now, but KLIC would compliment what it already has, so it might be willing to pay more for it. Be careful with your short - I may well be wrong in what I am seeing and it is mostly speculation on my part, but there is always the outside chance that I am right. Good luck, and glad to see you back."