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

To: Donald Wennerstrom who wrote (7887)	12/28/2002 6:08:27 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95520

Not much action for the SOX either this week. 12/20/02 12/27/02 FST CALL NEXT FST CALL CLOSE CLOSE PERCENT NXT YR YEAR LNG TRM SYMBOL PRICE PRICE CHANGE EARN PE GROWTH PEG LSCC 8.10 8.61 6 0.28 31 23 1.34 ALTR 11.86 12.24 3 0.32 38 25 1.53 AMAT* 13.31 13.52 2 0.50 27 20 1.33 MU 10.20 10.30 1 0.35 29 18 1.63 LSI 5.75 5.80 1 0.25 23 20 1.16 BRCM 15.84 15.92 1 0.18 88 35 2.53 MOT 8.96 9.00 0 0.38 24 12 1.97 NVLS* 28.58 28.61 0 0.43 67 23 2.96 TER* 13.44 13.45 0 -0.30 20 KLAC* 36.20 36.20 0 1.09 33 20 1.66 MXIM 34.17 33.81 -1 1.20 28 25 1.13 LLTC 26.80 26.40 -1 0.88 30 25 1.20 TXN 15.74 15.29 -3 0.31 49 20 2.47 INTC 17.01 16.40 -4 0.63 26 17 1.53 NSM 15.77 15.20 -4 0.45 34 19 1.83 AMD 6.62 6.35 -4 -0.59 15 XLNX 21.26 21.17 0 0.68 31 25 1.25 TOTALS 289.61 288.27 0 7.04 SOX-X 297.97 296.49 0 COMPQX1363.05 1348.31 -1 *In Semi-Equip Group

To: Donald Wennerstrom who wrote (7887)	12/29/2002 11:01:32 AM
From: Return to Sender	Read Replies (2) \| Respond to of 95520

Chips up, chips down Investors betting on a semiconductor rebound have been burned before, but the industry may have finally reached a bottom. by Dave Sterman yahoo.marketguide.com Semiconductor stocks have given investors a wild ride this year. In the spring, the Philadelphia Semiconductor Index (SOX) punctured the 600 mark. By early October, it was down to 210. A fall rally propelled the index to 375 by Thanksgiving—an 80 percent gain. Now it's below 300 again. Whiplash, anyone? But as share prices in the sector have pulled back, a few analysts think the time may be at hand to make long-term investments. To be sure, it's hard to get excited about the near-term outlook. The industry's book-to-bill (which measures the dollar value of shipments against the dollar value of new orders) was a paltry 0.79 in November. That marked the fifth straight month of contraction for the industry. However, that metric, which had been steadily dropping, fell all the way to 0.78 a month earlier. "We can't help but speculate that this must be some indication of a bottom," writes Bear Stearns' Robert Maire in a recent report. Maire concedes that many had expressed similar hopes in 2001, only to see them dashed. But he adds a silver lining: "Stocks are currently trading at lower valuations than a year ago." Of course, having reached a bottom doesn't imply that a rapid upturn is imminent. Maire thinks we're seeing a "murky, saucer-shaped bottom," but he's convinced that "the majority of the downward momentum has in fact stopped." Banc of America's Mark FitzGerald concurs, positing that further sub-1.0 readings in the book-to-bill ratio could actually be a positive as long as the number comes in above 0.79. He adds that "we could begin to trend higher—towards the 1.0 level—pointing to a bottom in the fundamentals." That logic led CIBC's Ali Irani to upgrade his view of the sector from "underweight" to "overweight." He expects share prices to rise in anticipation of a turn in the industry's fundamentals that should take place in the middle of 2003. That's because many firms may be poised for a profit rebound. Irani expects quarterly profits to be just okay in the fourth and first quarters, but to rise strongly thereafter, thanks to recent cost-cutting initiatives. "Q2 earnings have strong potential for an uptick on flat revenues," he predicts. Applied Materials If these analysts are correct in their outlook, that could be great news for shareholders in Applied Materials (AMAT), the world's largest provider of semiconductor capital equipment. Over the last two months, AMAT has surged and then fallen as investors wrestled with the prospects of a rebound. At 28 times projected fiscal (October) 2004 EPS of $0.47, the stock does not appear especially cheap, but analysts suggest that you look at the stock in terms of its potential earnings power down the road. Even though revenues are unlikely to match peak 2000 levels in the next rebound, profits could be quite strong, according to C.E. Unterberg's Stephen O'Rourke. Thanks to a "continued focus on cost control and operational efficiency, we do believe that AMAT can achieve prior peak earnings in the coming upturn," he notes. In fiscal 2000, AMAT earned $1.20 a share. Shares trade for just 11 times that level. A screenful of ideas If you want to look at other semiconductor stocks poised for a rebound, we've given you a head-start by creating a screen of the industry's largest 20 players. multexinvestor.com As earnings in the near term are likely to be lukewarm, CIBC's Irani suggests you focus on price/book as a valuation measure. By that score, he thinks a sector rebound would take small-cap stocks up to 3-4 times book value and large-cap stocks up to 5-7 times book value. Dave Sterman is the Director of Research of Chelsea Research and a financial commentator for various news outlets. Thanks for updating the tables Don. The fact that we finished the week nearly where we began is really interesting. What does it mean? There has been no year end Santa Claus rally but also the market has failed to truly breakdown despite a lot of geopolitical concerns. RtS