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

To: Cary Salsberg who wrote (5674)	9/28/2002 3:24:13 PM
From: Alastair McIntosh	Read Replies (1) \| Respond to of 95530

Re: Analysts pretend they can see "next year", but I don't think we need to. Cary, "next year" is important to investors who care about the returns of their portfolio over the next year. I think that most investors do. Share prices most certainly react to short term events. Chances are good that declining BTB and lower capital budgets will drive prices much lower. By "victim of its own success" I mean that chip manufacturing efficiencies are not benefiting the SCE suppliers as once was the case. Capital equipment costs will continue to decline as a fraction of IC revenues. IC unit revenues (ASP's) are declining so that the SCE suppliers are getting a smaller piece of a smaller pie. For now the number of IC units produced has stopped reacting to price elasticity. How long this will last I don't know. At some point the pie will start to get bigger but I believe that the industry will not return to the 25% growth rates it once enjoyed. Now, because of the mess we are in, you conjecture that faster, cheaper, smaller, more powerful, less power consumption will no longer produce new applications and rapidly rising revenues. I don't know what you are referring to by "the mess we are in" but I certainly don't believe that "faster, cheaper, smaller, more powerful, less power consumption will no longer produce new applications." However, I am not sure about the rapidly rising revenues for the SCE group. I guess our difference in viewpoint comes down to this: I don't think the SCE sector will return to the growth rates it once enjoyed. You believe that it will. You also appear to have the ability to accept significant portfolio declines because you have sufficient confidence in the long term outcome.