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To: ild who wrote (242669)	5/27/2003 9:42:33 PM
From: orkrious	Read Replies (3) \| Respond to of 436258

AHEAD OF THE TAPE By JESSE EISINGER online.wsj.com Tech Orientation There are signs that SARS is penetrating technology stocks' immune systems. During the next several weeks, a handful of influential technology companies will start to give midquarter updates. Semiconductor-equipment maker Novellus Systems Inc. is scheduled for Thursday, and the news could be unpleasant. If you want to know what the future of U.S. tech companies holds, look East. In Asia, production has slowed sharply as SARS has slowed down the economy, inventories have built up and consumer demand for PCs and cellphones has fallen off drastically. For many tech companies, such as Intel Corp., Asia had been the last growth engine. Nevertheless, tech stocks have moved up sharply this year, now sporting heady valuations. Applied Materials Inc. is trading at 105 times the estimates for fiscal 2003, ending in October. Perhaps investors have determined that the threat of severe acute respiratory syndrome is past and are willing to look beyond a weak second quarter. But that seems complacent. We'll see how easy it is to ignore if bunches of companies start warning on earnings. Also, this could drag into the third quarter at least. J.P. Morgan's Chris Danely wrote last week that "as a result of excess inventory and SARS, we believe most U.S. semiconductor companies in the PC end market will have to lower second-quarter revenue and EPS estimates, including Intel and AMD [Advanced Micro Devices Inc.]." What are the ominous signs? Memory-chip prices are plummeting. PC inventories in China are at around 15 weeks to 20 weeks, compared with the normal six. The Taiwanese motherboard makers, which are a leading indicator of PC and semiconductor demand, had disappointing bookings in April, and May looks slower. Korean handset shipments fell more than 15% in April from March. That should put Texas Instruments Inc. squarely in investors' sights. In the U.S., the April book-to-bill numbers flashed a warning. The reading was below 1, meaning there were more sales than orders. Orders were down from March and down 26% year-to-year. Perhaps the bulls will turn to the argument that there will be pent-up demand when the SARS fear passes. It's possible. And after the stocks slink to reasonable valuations, they might be worth buying.