Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (6002)	4/24/2002 5:28:29 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 33421

SOX: stockcharts.com[h,a]dahlnyay[df][pb50!b200!f][vc60]&pref=G After spending April and March above the 200DMA, we collapsed and closed below that line today. Hard to see where support is, but we're not there yet. Weak support at about 500 (lows in 2/02, 1/02, and close to the 11/00 low), but I doubt that holds. Below that, way below that, there is the 9/01 low at 344. The consensus of investors, on semis, now seems to be: The bottom is in, the recession is over, end-demand for chips will increase from here on out, inventory drawdowns are mostly over, but.......the upturn will be so weak, that current valuations can't be justified. Especially if you take all the Creative Accounting out of the numbers. For most semis (and their customers, and customers of customers), if you put back in all the repetitive "one-time charges", all the "Big Bath" events, and treat employee stock options as a current expense, as employee compensation, then all the quality semis are at a PEG of 2 or 3 or 4 or more, even using 2003 EPS. The good news is, the semis generally have no LT debt, and are sitting on a pile of cash built up during the Bubble. But their customer base often does have a lot of LT debt, so they are exposed to effects from the continuing downgrading of debt ratings. If you were a banker, would you lend money to WCOM or AT&T Wireless? On any terms? Probably not, and so WCOM cuts their capex, which works its way up the chain, to semis like XLNX and TXN.