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

To: Return to Sender who wrote (9163)	3/27/2003 10:48:51 AM
From: Return to Sender	Respond to of 95645

Ripe for the Picking : The title would lead you to believe that we are going to talk about companies that make produce or something of that nature. No, we are making the focal point a sector, which is producing financial results that suggests it might be poised for more upside in the upcoming quarter. In a previous piece (See Other Commentary for 03/24/03), I discussed the significance of suspension assembly supplier Hutchinson Technology (HTCH) and the hard disk drive (HDD) sector's momentum going into the upcoming quarter. We are continuing to hear optimism in the following HDD names: Maxtor Corporation (MXO), Seagate (STX) and Western Digital (WDC). The primary impetus for this particular optimism can be attributed to the HDD sector's December performance, which has been characterized as its strongest in five years. The momentum in the sector going into the upcoming quarter continues to be encouraging with no real signals of potential caveats obfuscating its forward trajectory as it relates specifically to the HDD names. We are hearing this sector's momentum in confluence with the current valuations associated with the aforementioned HDD companies might suggest an attractive entry point for investors. In reviewing these companies December results, the message being conveyed here is even more apparent. Maxtor's Multex consensus expectations for its Dec earnings announcement were earnings of $0.12 per share with revs of $1.00 bln and the actual numbers were earnings of $0.15 per share with revs of $1.03 bln. Seagate's results go even further to suggest that this is sector specific and not an example of an isolated coincidence. The company's earnings came in at $0.43 per share vs. Multex consensus of $0.30 per share. Revenues were $1.73 bln vs. Multex consensus of $1.61 bln. Are we beginning to see a pattern here? To make sure of it, lets look at Western Digital's results. The Company reported earnings of $0.36 per share with revs of $749.5 mln vs. Multex consensus EPS of $0.14 and revs of $631.1 mln. The trilateral nature of these results can be attributed to growth associated with a new product cycle. To be more specific, the 80Gb product cycle has yet to take full momentum within the HDD group. The last quarter's earnings results for the group illustrate its beginning with its progression continuing into the next quarters. A Hoefer & Arnett analyst recently provided his outlook on the disk drive sector stating, We continue to see numerous signals of a fundamental improvement in the drive business, which we believe could last for an extended period of time. Despite the truth being out there on these companies, short interest continues to increase with their respective stock prices not being able to get over the horrible stigma of being labeled a single digit stock. If you consider the view of the HDD names from a product cycle based vantage point, it suggests these stocks have plenty of room for more upside on both the top and bottom line. MXO, STX and WDC currently trade at 8.8x, 8.0x and 10.3x forward FY04 earnings, respectively. -- John Meza, Briefing.com briefing.com

To: Return to Sender who wrote (9163)	3/27/2003 10:49:12 AM
From: Gottfried	Read Replies (1) \| Respond to of 95645

RtX, that's my sentiment, too :) >sentiment indicators are really mixed giving off no clear signals< You have to be able to predict war news to trade here. Gottfried