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

To: Return to Sender who wrote (2442)	3/27/2002 12:28:54 PM
From: Cary Salsberg	Read Replies (3) \| Respond to of 95960

RE: "Lets think about posting some realistic expectations." For semi-equips: 1. The industry is not in a normal cyclical pattern. The previous cycle was accelerated by the bubble and interrupted by the bubble bursting. 2. This upcycle will move from bubble aftermath to normal cycle in a couple of years. 3. It is important to estimate the timing and magnitude of the cycle top. 4. The estimates will become more accurate as the top draws closer. 5. The market will discount the top well in advance and there will be ample opportunity to exit gracefully. In this context: AMAT will achieve $20B revenues and $5.50/share earnings in 2007-08. Peak price for the cycle will be in the range $110-165 in 2006-07. If this scenario holds and is applicable to the industry, covered calls are likely to be a valuabe addition to an underlying strategy of LTB&H. Obviously, the estimate has much time for refinement and other views should be added to this current tentative mix. For semis: 1. Unit volumes have not been cyclical, but have a long term positive secular uptrend. Prices have a long term secular downtrend. Revenues have been cyclical because of the supply side capacity situation. 2. The largest revenues are produced by commodity chips and these characterize the industry. The best investments are in proprietary chips produced by companies that have reasonable competitive advantages and barriers to entry. The greatest gains go to leaders in a particular application, but usually the application become a commodity and the value of the leader falls. Examples of long term value are: ALTR, XLNX, LLTC, MXIM. Examples of short term leaders are: NVDA, GNSS, ESST, ZRAN, ISIL, BRCM, RFMD, AMCC, PMCS, TQNT, VTSS. Examples of potential long term value are: MCRL, CREE, ISIL/ELNT.