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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (1665)	1/15/2002 10:16:53 PM
From: Return to Sender	Respond to of 95572

Goodbye, Mr. Chip Equipment By Tish Williams Senior Writer 01/15/2002 08:26 PM EST thestreet.com Intel (INTC:Nasdaq - news - commentary - research - analysis) served up some indigestion to investors after Tuesday's market close when it announced it would hack off 25% its capital-spending plans for 2002. The chip giant consumes a large portion of the entire market for chip equipment, and news that it plans to curb its appetite caught chip-equipment investors off-guard. Intel spent $7.3 billion in 2001, but will trim that back to $5.7 billion in 2002. Applied Materials (AMAT:Nasdaq - news - commentary - research - analysis) fell 6.5% in the hour following the announcement, while smaller competitors Novellus Systems (NVLS:Nasdaq - news - commentary - research - analysis) and KLA Tencor (KLAC:Nasdaq - news - commentary - research - analysis) lost 6% apiece. Despite hard times in the chip business, and even tougher ones for the companies that stock the manufacturing facilities of those chip companies, Applied Materials' stock has run up 59% since Oct. 1. Novellus shares climbed 55% in that same time period, while KLA Tencor shot up a stunning 80%. This comes as investors are waving goodbye to the worst chip year in memory, in the hope that better days are coming soon. Related Stories How Intel Got Its Groove Back RF Micro Meets Third-Quarter Number Chip Investors' Short Memory Semiconductor Stocks Should Make Your Shopping List Intel's capex plans have been the subject of heated speculation for months, as pundits have tossed around projections as dire as a 40% cut to the chipmaker's spending outlay. That proved too drastic, but in recent weeks, as good news about holiday PC purchases rolled in from AMD (AMD:NYSE - news - commentary - research - analysis), Intel and Compaq (CPQ:NYSE - news - commentary - research - analysis), Wall Street began to lean toward a milder Intel cut. Credit Suisse First Boston told clients in a Tuesday note that Intel's capex reduction would be flat to slightly down, or as little as 7%. CSFB analyst John Pitzer repeated what Intel has said consistently over the past year: It wants to keep spending during troubled times to increase its competitive advantage. The impact of Intel's plan comes into focus when reviewing Pitzer's estimates for capital expenditures. He estimated that the chip sector will spend $31 billion on equipment in 2002, meaning Intel's new budget could carve as much as 5% out of overall spending on chip equipment.