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

To: advocatedevil who wrote (62022)	3/13/2002 4:43:00 PM
From: Terry D	Read Replies (1) \| Respond to of 70976

This was the morning downgrade from Bear Stearns Robert Maire - Semiconductor Capital Equipment Sector Update We believe stock valuations are not based on past or present performance of cos. but rather on future and potential performance of co.; this is evident in semiconductor capital equipment stocks. Investors are ahead of the fundamentals of the industry recovery and have recently pushed stock prices and valuations up another notch. However, forward earnings and revenues visibility is limited, as we don’t have enough data points to fully understand what the slope of the recovery will be. The current up-cycle will be more technologically driven than previous cycles which were driven by both capacity and technology purchases. Given the current state of relatively low factory utilization rates, weak demand, but overwhelming never-before-seen technological change, it is clear the more technologically differentiated cos. will outperform in the current upturn. Especially those cos. which aid in implementing and analyzing the numerous technological changes ahead: cos. such as KLA-Tencor (KLAC, Buy, $66.11, Target: $70) and Rudolph Technologies RTEC, Buy, $44.85, Target: $50). In addition, DRAM pricing has remained amazingly firm in light of the fact that we are in what is usually the weakest seasonal quarter for DRAM pricing. Recent SIA data, continues to support a recovery in semiconductor sales. Inventory levels continue to move towards more “normal” levels. We believe utilization of the factories will continue to improve at a faster rate than will the unit demand for semiconductors. We believe the “sweet spot” of the market today is 0.18 micron technology. The move to 300mm will not be as fast as previously anticipated. In the back-end, the move to new packaging methodologies such as flip chip and bump will likely re-accelerate in the current upturn driven by their lower cost, better performance and higher quality. Cos. that could benefit are Ultratech Stepper (UTEK, Buy, $19.12, Target $40) and Semitool ƒ (SMTL, Buy, $11.42, Target $20). Higher levels of telecommunications exposure may act as a drag on the recovery of some cos. such as Agilent (A, Attractive, $36.01, Target $40) or Teradyne (TER, Attractive, $37.48, Target: $45). In general, cos. in the back-end such as testing cos., tend to lag the recovery and indeed in this cycle got down to much lower levels of business than did front-end cos.