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

To: robert b furman who wrote (5238)	9/1/2002 4:34:04 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 95515

RE: "I have long been a forecaster of either AMAT or A buying out Cohu as they decide to enter the backend of the semi-equip." I don't understand why AMAT would buy COHU or why they might want to enter the "backend". A seems like one we can watch for 5 or 10 years to figure out what their competitive advantages and barriers to entry are. They have a wonderful pedigree, but it is hard to know how benign the spinoff really was.

To: robert b furman who wrote (5238)	9/2/2002 10:47:09 AM
From: Return to Sender	Respond to of 95515

Is Today's Market Fairly Valued? businessweek.com The numbers tell veteran strategist and historian Steven Leuthold that it is, which would be good news for frazzled investors Want to start an argument on Wall Street? Of course, that's not so hard to do, considering all the highly charged traders on the Street aggressively competing for profits. Still, you can spark a vociferous fight by asking whether the stock market is overvalued or undervalued. Passionate advocates will stake out both sides of the debate. Take the traditional market-valuation technique that compares the forward earnings yield on the Standard & Poor's 500-stock index to the yield on the 10-year U.S. Treasury bond. By this metric, the stock market is undervalued by about a third. If so, it's time to rush headlong into stocks. But other money mavens consider this approach little more than mathematical drivel. Now at 33, the price-earnings ratio of the S&P 500 has years of further declines ahead until it settles back at its historic average of 14 to 15. Or so that school of thinking goes. UPBEAT PLOT. The divergence is enough to make anyone throw up their hands, declare that markets fluctuate on unpredictable manic shifts in investor moods, and declare oneself a market cynic -- memorably defined by Oscar Wilde as someone who "knows the price of everything, and the value of nothing." Hold on. Just as in fiction and documentaries, narrative extremes on Wall Street make for compelling stories. But the tale of stock market valuation may be a more subdued saga with a moderately upbeat plot: Equities are no longer overvalued. Put somewhat differently, the glass is half full rather than half empty. And that would be a convincing argument for investors to stay put, confident that they're not in for more sweeping price declines. That the stock market is near normal valuation levels is what Steven Leuthold, an investment strategist and researcher, concluded in a recent report. Leuthold is well worth heeding. A successful Wall Street veteran and legendary market historian, Leuthold has been an active money manager for more than three decades. He's well known among the financial cognoscenti for his detailed quantitative studies on market valuation. LONG AND DETAILED. Perhaps most important, Leuthold was among the most vocal bears during the height of the '90s stock market boom, constantly preaching the benefits of diversification and prudently managing investor money. Leuthold's reasoning is long and detailed. In brief, he goes back to 1926 and calculates median valuation levels during low-inflation quarters through July of this year. He also normalizes earnings over five-year periods to eliminate distortions. The median normalized p-e for the S&P 500 in eras of low inflation over the past 76 years has been 18.3. That's within a decent throw of the market's normalized p-e of 19.5. Although there isn't a lot of sound historic data on small to midsize stocks, Leuthold figures this universe is undervalued by about a third. Taken altogether, with some of the larger-cap stocks that are overvalued, he estimates that, in fact, the market is fairly valued. THE CASE FOR BUYING. The market may be backing him up. Indeed, Wall Street's downward momentum has braked recently as investors have driven up the S&P 500 by some 17% since its July nadir. Yet it's apparent that many Americans -- investors and consumers alike -- remain uneasy. The economy is disturbingly weak even though a double-dip recession remains unlikely. The painful first anniversary of the September 11 attacks is a sobering reminder that the war on terror is far from over, if ever. The Administration's relentless saber-rattling against Iraq has driven oil prices up sharply. Policymakers openly worry that the U.S. economy could sink into a Japanese-like stagnation. Still, despite all the anxiety that the recent rally will fizzle like so many others over the past three years, now isn't the time to flee stocks. If Leuthold is right -- and it's reasonable to think he is -- this may be an opportune time for taking some more risk in the beat-up stock market. Farrell is contributing economics editor for BusinessWeek. His Sound Money radio commentaries are broadcast over Minnesota Public Radio on Saturdays in nearly 200 markets nationwide. Follow his weekly Sound Money column, only on BusinessWeek Online Edited by Christopher Farrell So far on this cycle there have been a few mergers of very similar companies and very few outright buy outs. Therefore I think A is unlikely to buy COHU and AMAT does not really need them. This article is interesting too: bcaresearch.com RtS