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

To: Donald Wennerstrom who wrote (3022)	5/4/2002 9:45:30 PM
From: Gottfried	Respond to of 95463

Don, what? No differential equations? Seriously, thank you for the estimate. I look forward to seeing the graph on your web site.<G> Since 2001 billings were 16903 [obtained by adding Jan - Dec numbers], your 2002 estimate total is of interest. What is it? Gottfried

To: Donald Wennerstrom who wrote (3022)	5/4/2002 10:40:05 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 95463

Hi Don, First, I'd like to say that I'm a long-time listener, first-time caller. As they say on radio shows. Without meaning to quibble, I assume that all the K's in your post should be M's (as in millions). To extrapolate from your figures, I assume that the sum total of equip bookings during the 3 up-swing periods were: Jan 95 to Feb 96 -> $16,800 m. Sep 96 to Oct 97 -> $17,000 m. Sep 98 to Aug 00 -> $41,568 m. Doodling some more with the figures, I get that from Jan 95 to Aug 96 (a total cycle), avg monthly booking were $1,210m. Then the 2nd cycle, Sept 96 to Aug 98, avg monthly bookings were $1,190m. In the third cycle, Sept 98 to Oct 01, avg monthly bookings were $1,750m. So the question is whether the industry will run at the $1,200m/month avg that prevailed from Jan 95 to Aug 98 ? Or whether it has permanently bumped up to $1,750m/month avg of the past 3.5 years ? From looking at the over-capacity that exists at fab facilities. And also from noting that Intel's cap budget for this year is $5.5 b, which I think is down 2b from last year, and also others like LSI which is not increasing spending, I'd say the lower of your estimates is more likely for this year. I don't know whether Micron has indicated their budget or not. My guess is a lot of the higher level of spending in the last cycle came from telecom, which has no money to spend now, even if they wanted to. So I vote for $1,400m by year end. I hope that was coherent. Sarmad

To: Donald Wennerstrom who wrote (3022)	5/4/2002 11:50:33 PM
From: Gottfried	Read Replies (1) \| Respond to of 95463

Don, I just noticed you used bookings for your estimates. We need billings instead to estimate sales for 2002. Gottfried

To: Donald Wennerstrom who wrote (3022)	5/5/2002 5:40:48 AM
From: scott_jiminez	Read Replies (4) \| Respond to of 95463

Don - two questions: 1. The method of calculating bookings and/or billings has recently changed. Though I forget the nature of the change, my recollection is that it inflated the BtB versus the old method. Is there any problem comparing the 'old' bookings/billings data with the 'new'? 2. In the 3 'booking cycles' you cite, my perception is that most stocks in the sector began strong rallies soon after the bookings turnaround (and certainly subsequent to the billings turn). If my memory is not completely Jello, 4-6 months into the prior 3 'booking up cycles', 90%+ of the stocks in the sector were surging up...and continued to surge for ~6 or more months. You know what my next question is: so what the heck is going on now? We're 4-6 months into the current 'booking up cycle', a time when history tells us the sector should be on a tear, and the SOXX is crashing (and the equipment stocks are LEADING the market down, not passively following along). The current behavior of the sector is historically unique (vs. the cycles you cite): while your bookings extrapolations are based on the historical record, investors appear to telling us that this time is different (in the worse possible sense). If the distortion of Sept. 11 is removed, the SOXX just closed at its lowest level since 04 April, 2001 (463) - a level for that period which appeared to be appropriate since bookings and billings were very bad..and not improving. But now we have this bizarre dichotomy of bookings increasing while the SOXX is leading the market lower day after day after day. And since, on a relative basis, the data comprising the BtB is a lagging indicator versus the stock market, I find the SOXX/bookings anomaly disturbing. To say the least. My experience in this sector tells me that investors can get very, very wound up in cycle-extrapolation while ignoring what is happening in their face (I am an egregious repeat offender). How many times have I thought to myself, 'Why in the <bleep> is the stock (read: KLIC) doing 'X' when EVERYONE KNOWS the data is saying 'Y'?' Almost invariably the answer arrives 3-6 months later when the 'real world' data come out. And right now the equipment stocks are telling us, IMO, that we may very well be going through another significant contraction, another down cycle, that will be at least as vicious as the one supposedly just completed. In contrast to the expectations raised over the past couple of months, I think the equipment sector could be dead money, if not a lot worse, for the rest of this year (this conclusion, in fact this entire mighty tome, should serve as a clarion call for the sector to begin its greatest rally in history at 9:30 AM, Monday, May 6, 2002 <gg>). Sarmad's concerns regarding Intel's substantially reduced CAPEX, the virtual absence of telecom CAPEX, and the overcapacity of fabs are, IMO, compelling. A picture emerges of a sector where the historical generators of growth (at least during the previous ~decade) are 'limited'...to phrase my current outlook in the gentlest of possible terms. I've been investing in the equipment stocks for 6-7 years now and I've learned some very tough (and costly) lessons regarding the separation of (primarily subjective) wishful thinking from (primarily objective) 'real world' sector conditions. The current application of the tiny bit of wisdom I've gained from this experience tells me that the bookings (or billings) extrapolation, in light of the plunge in the equipment stocks, will not provide an accurate prognostication of the equipment sector for the next 3-4 quarters. Best wishes, Scott (a.k.a. Mr. Cheerful)