Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Gottfried who wrote (10986)	8/14/2003 7:16:26 PM
From: Donald Wennerstrom	Read Replies (2) \| Respond to of 95735

Briefing.com has a couple of write-ups on the semi-equip universe as follows: <Sizing up Semi Cap Equipment : The semiconductor sector had a nice run-up Wednesday after the earnings announcements from Applied Materials (AMAT) and Maxim (MXIM). The vanguard companies of the semiconductor capital equipment space either skirted 52-week highs or achieved some technical accolade in Wednesday's trading. In addition, we were also hearing positive comments coming from Novellus (NVLS) at the Soundview Conference yesterday as well. Our question is, did the market not listen to the Applied Materials call? The salient point for recovery that most people are interested in for semi cap equipment earnings announcements during the "holding pattern" of the semi cycle is guidance. While AMAT expects its Q4 gross orders to grow to the tune of 10%, revenues are expected to remain flat to slightly up with its earnings in the range of $0.04-$0.05 per share, which was below the consensus estimate. The other piece of information people look for is data that can give the street an idea of when orders will begin to return to the very specialized companies. Visibility continues to be an issue, as the need to expand capacity at fabs does not seem to be imminent. Briefing.com's coverage of the semiconductor sector included a cautious piece on August 1, 2003, entitled "The Semi Cap Equipment Train…All Aboard?", that was written in the wake of some questionable analyst upgrades in the semi cap equipment sector. In that piece, we recommended investors either stay on the sidelines or take profits. The visibility question was addressed on Briefing.com on July 21 in a piece entitled "Thoughts on SEMI" regarding the implications of the Semiconductor Equipment and Materials International's book-to-bill number for June. Despite all of this information not auguring well for expectations of recovery, the semiconductor/capital equipment names continue to rise and their valuations continue to balloon with the air of hopeful thinking. For more thoughts on why Briefing.com thinks it's time for the balloon to deflate on semi cap equipment stocks, be sure to visit our Stock Brief page.-- John Meza, Briefing.com> Stock Brief Page: Applied Materials Material Announcement [BRIEFING.COM - John Meza] The semiconductor sector had a nice run-up Wednesday after the earnings announcements from Applied Materials (AMAT) and Maxim (MXIM). The vanguard companies of the semiconductor capital equipment space either skirted 52-week highs or achieved some technical accolade in Wednesday's trading. In addition, we were also hearing positive comments coming from Novellus (NVLS) at the Soundview Conference yesterday as well. Our question is, did the market not listen to the Applied Materials call? And Your Point Is? Well, the salient point for recovery that most people are interested in for semi cap equipment earnings announcements during the "holding pattern" of the semi cycle is guidance. While AMAT expects its Q4 gross orders to grow to the tune of 10%, revenues are expected to remain flat to slightly up with its earnings in the range of $0.04-$0.05 per share, which was below the consensus estimate at the time. The other piece of information people look for is data that can give the street an idea of when orders will begin to return to the very specialized companies. Visibility continues to be an issue, as the need to expand capacity at fabs does not seem to be imminent. Briefing.com's coverage of the semiconductor sector included a cautious piece on August 1, 2003, entitled "The Semi Cap Equipment Train…All Aboard?", that was written in the wake of some questionable analyst upgrades in the semi cap equipment sector. In that piece, we recommended investors either stay on the sidelines or take profits. The visibility question was addressed on Briefing.com on July 21 in a piece entitled "Thoughts on SEMI" regarding the implications of the Semiconductor Equipment and Materials International's book-to-bill number for June. Despite all of this information not auguring well for expectations of recovery, the semiconductor/capital equipment names continue to rise and their valuations continue to balloon with the air of hopeful thinking. Good, but Not Convincing While AMAT continues to weather the storm and performed in line with consensus expectations, there are still some points from the call that only push out the notion of recovery and make valuations exceedingly unnerving. DRAM represented 47% of revenues for the quarter as opposed to 25% in the previous quarter. While management's guidance is probably fairly conservative (the co beat by a penny in Q3, Q2 and Q4), the DRAM revenue figure was fairly significant this quarter and will return to normal levels next quarter. However, street expectations of DRAM demand are reflective of a general weakening in the DRAM market as spot prices are expected to decline as fall approaches. Another interesting point is flat "tape outs" from the previous quarter. According to SierraTech Research's semiconductor analyst, Greg McClenon, "tape-outs are the tapes that are used to generate the photomasks. The significance of this data point suggests a general anemic state of new design activity by semiconductor companies for the purpose of product innovation. The flatness of tape-outs signifies a lack of interest in designing new products given the lack of demand associated with the lackadaisical semiconductor environment." Mr. McClenon also notes, "the leading indicator is subject to statistical error if the sample size is too long. One set of photomask tooling may run many more devices than another. However, on the aggregate, with a sufficiently large sample size, the indicator should reflect the trend." Still Lacking Visibility AMAT did shed some light on its opinion of the semiconductor industry by stating it believes it has bottomed out. The company believes aggregate demand is increasing and said IT spending appears to be rising. While this information is encouraging, the company is still experiencing cancellations and adjustments with no real visibility as to when the recovery begins to ensue in the sector. Despite all of the upgrades by bulge bracket analysts, there is one particular firm that shares our contention on the space. Fahnestock semi cap equipment analyst Gerald Fleming has a Sell rating on Applied Materials and trimmed his estimates Wednesday in light of sluggish Q3 orders. Briefing.com continues to believe semi cap equipment stocks are overbought and that valuations continue to be too high. AMAT is trading at 147.0x forward FY03 and 7.2x forward sales FY03. By including data from 08/96 to the present, further valuation analysis illustrates the stock has traded as high as 205.3x earnings on 5/31/02 and at an average 49.7x earnings. In addition, AMAT has traded as high as 15.0x sales on 4/28/00 with an average of 4.9x sales. The stock typically trades higher as inferential data points are disseminated suggesting recovery from the bottom of a semiconductor cycle. However, history can repeat itself. To wit, the stock's valuations surged last year on expectations of a return to meaningful order growth that, ultimately, failed to come to fruition. The sector, from our vantage point, should continue to experience pressure given the current environment where there is no visibility on the timing of the much anticipated recovery. For any questions, concerns or comments, send an e-mail to John Mezaat Briefing.com>

To: Gottfried who wrote (10986)	8/15/2003 8:42:43 PM
From: Gottfried	Read Replies (1) \| Respond to of 95735

bpNDX unchanged at 65% Aug04 Aug05 Aug06 Aug07 Aug08 Aug11 Aug12 Aug13 Aug14 Aug15 AAPL ALTR AMAT AMGN AAPL AMZN ALTR APCC AMAT APOL AMGN AAPL BBBY AMZN ALTR AAPL BEAS APCC AMAT ALTR AAPL AAPL BMET APOL AMGN AMAT AAPL AAPL AAPL AAPL ALTR ALTR BRCD BBBY AMZN AMGN ALTR ALTR ALTR ALTR AMAT AMAT CDWC BEAS APCC AMZN AMAT AMAT AMAT AMAT AMGN AMGN CEPH BMET APOL APCC AMGN AMGN AMGN AMGN AMZN AMZN CHRW BRCD BBBY APOL AMZN AMZN AMZN AMZN APCC APCC CIEN CDWC BEAS BBBY APCC APCC APCC APCC APOL APOL COST CHRW BMET BEAS APOL APOL APOL APOL BBBY BBBY CPWR CIEN BRCD BMET BBBY BBBY BBBY BBBY BEAS BEAS CSCO COST CDWC BRCD BEAS BEAS BEAS BEAS BMET BMET CTAS CPWR CHRW CDWC BMET BMET BMET BMET BRCD BRCD DELL CSCO CIEN CHRW BRCD BRCD BRCD BRCD CDWC CDWC DISH CTAS COST CIEN CDWC CDWC CDWC CDWC CHRW CHRW DLTR DELL CPWR COST CHRW CHRW CHRW CHRW CIEN CIEN EBAY DISH CSCO CPWR CIEN CIEN CIEN CIEN COST COST ERICY DLTR CTAS CTAS COST COST COST COST CPWR CPWR ERTS EBAY DELL DELL CPWR CPWR CPWR CPWR CTAS CTAS EXPD ERICY DISH DISH CTAS CTAS CTAS CTAS DELL DELL FAST ERTS DLTR DLTR DELL DELL DELL DELL DISH DISH FHCC EXPD EBAY EBAY DISH DISH DISH DISH DLTR DLTR FISV FAST ERICY ERICY DLTR DLTR DLTR DLTR EBAY EBAY FLEX FHCC ERTS ERTS EBAY EBAY EBAY EBAY ERICY ERICY GENZ FISV EXPD EXPD ERICY ERICY ERICY ERICY ERTS ERTS GNTX FLEX FAST FAST ERTS ERTS ERTS ERTS EXPD EXPD HSIC GENZ FHCC FHCC EXPD EXPD EXPD EXPD FAST FAST IACI GNTX FISV FISV FAST FAST FAST FAST FHCC FHCC ICOS HSIC FLEX FLEX FHCC FHCC FHCC FHCC FISV FISV INTC ICOS GNTX GNTX FISV FISV FISV FISV FLEX FLEX INTU INTC HSIC HSIC FLEX FLEX FLEX FLEX GNTX GNTX IVGN INTU INTC INTC GNTX GNTX GNTX GNTX HSIC HSIC JDSU IVGN INTU INTU HSIC HSIC HSIC HSIC INTC INTC JNPR JDSU IVGN IVGN INTC INTC INTC INTC INTU INTU KLAC JNPR JDSU JDSU INTU INTU INTU INTU IVGN IVGN LLTC KLAC JNPR JNPR IVGN IVGN IVGN IVGN JDSU JDSU LNCR LLTC KLAC KLAC JDSU JDSU JDSU JDSU JNPR JNPR MCHP LNCR LLTC LLTC JNPR JNPR JNPR JNPR KLAC KLAC MEDI MCHP LNCR LNCR KLAC KLAC KLAC KLAC LLTC LLTC MERQ MEDI MCHP MCHP LLTC LLTC LLTC LLTC LNCR LNCR MOLX MERQ MEDI MEDI LNCR LNCR LNCR LNCR MCHP MCHP MSFT MOLX MERQ MERQ MCHP MCHP MCHP MCHP MEDI MEDI NVDA MSFT MOLX MOLX MEDI MEDI MEDI MEDI MERQ MERQ NXTL NVDA MSFT MSFT MERQ MERQ MERQ MERQ MOLX MOLX ORCL NXTL NVDA NVDA MOLX MOLX MOLX MOLX MSFT MSFT PAYX ORCL NXTL NXTL MSFT MSFT MSFT MSFT NXTL NXTL PCAR PAYX ORCL ORCL NXTL NXTL NXTL NXTL ORCL ORCL PDCO PCAR PAYX PAYX ORCL ORCL ORCL ORCL PAYX PAYX PETM PDCO PCAR PCAR PAYX PAYX PAYX PAYX PCAR PCAR PIXR PETM PDCO PDCO PCAR PCAR PCAR PCAR PDCO PDCO PSFT PIXR PETM PETM PDCO PDCO PDCO PDCO PETM PETM ROST PSFT PIXR PIXR PETM PETM PETM PETM PSFT PSFT RYAAY ROST PSFT PSFT PSFT PSFT PSFT PSFT ROST ROST SANM RYAAY ROST ROST ROST ROST ROST ROST RYAAY RYAAY SBUX SANM RYAAY RYAAY RYAAY RYAAY RYAAY RYAAY SANM SANM SEBL SBUX SANM SANM SANM SANM SANM SANM SBUX SBUX SIAL SEBL SBUX SBUX SBUX SBUX SBUX SBUX SEBL SEBL SNPS SIAL SEBL SEBL SEBL SEBL SEBL SEBL SIAL SIAL SPOT SNPS SIAL SIAL SIAL SIAL SIAL SIAL SNPS SNPS SUNW SUNW SNPS SNPS SNPS SNPS SNPS SNPS SSCC SSCC SYMC SYMC SUNW SUNW SUNW SUNW SUNW SUNW SUNW SUNW TEVA TEVA SYMC SYMC SYMC SYMC SYMC SYMC SYMC SYMC VRTS VRTS TEVA TEVA TEVA TEVA TEVA TEVA TEVA TEVA WFMI WFMI VRTS VRTS VRTS VRTS VRTS VRTS VRTS VRTS XLNX XLNX WFMI WFMI WFMI WFMI WFMI WFMI WFMI WFMI XRAY XRAY XLNX XLNX XLNX XLNX XLNX XLNX XLNX XLNX YHOO YHOO XRAY XRAY XRAY XRAY XRAY XRAY XRAY XRAY .