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

To: Cary Salsberg who wrote (11167)	8/23/2003 2:47:45 PM
From: Gottfried	Respond to of 95632

Cary, :) those pundits usually lump internet sellers like Amazon and Ebay with technology - one of my pet peeves. Gottfried

To: Cary Salsberg who wrote (11167)	8/23/2003 5:30:48 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 95632

Cary, Only 1, INTC, is a technology company, so lack of excitement might be due to lack of knowledge about technology. I am curious as to what is your definition of a technology company? My definition of a technology company is any company in which 50-60% of revenues in any given year is created by products that were not on the market 2 years ago. Using this measure, many(most??) so-called technolgy companies would be eliminated from having that nomenclature. Technology in my mind means constant innovation. Brian

To: Cary Salsberg who wrote (11167)	8/24/2003 12:47:35 AM
From: Return to Sender	Respond to of 95632

SNIP: When the clock struck 10:00 the bull's tech express turned into a pumpkin and the wheels quickly fell off the rally. I say this only tongue in cheek because nothing has really changed. The drop from the highs of the day was dramatic but it occurred on low volume and it was very orderly. Decliners beat advancers 2:1 but new highs still hit 721 and new lows only 53. The VIX was not off or under the scale with a low of 19.41 but it has climbed for four days from its 19.06 low on Monday. No news there. So what derailed the tech express in light of the Intel announcement? Intel itself was the primary cause of the change in sentiment. Intel CEO Craig Barrett went on record Thursday by saying they were seeing some selective buying in PCs but he qualified it with "We're not seeing a big upgrade cycle and we're not seeing IT budgets being raised." Ok, we can all buy that and thank you for the clarification. He knew what was coming and wanted to blunt the reaction. Friday morning Intel raised revenue estimates from +6% growth to +11% growth for the quarter over last year and raised the gross margin to 56% from 54%. The new $7.55B estimate was higher than the consensus estimates of $7.24B by about $300M. The margin gains are being fueled by a move to the higher end products like chips for notebooks and servers. We have heard from Dell, HPQ and GTW that PC sales are soft with the only consumer interest in laptops. Servers are so cheap that companies are beginning to selectively upgrade but the real key was the stronger than expected back to school bounce. Consumers are taking their tax checks and refi funds and buying new computers for students. Intel said they did not see it coming because of the very low visibility in the market. Also helping them is the price war between Dell, HPQ and the white box makers. The prices are so low for the commodity PC that retail buyers are being lured into the back to school market where they would not have ventured before. The $499 computer is flooding the market and the only winner is Intel. The box makers all buy the same chips and they are cutting their throat on the sell side to keep the volume up. You can imagine Intel's delight to see the chips flowing out the door like cocaine to street dealers. There is no profit in the food chain unless you are at the top and everybody is continuing to deal just to support their habits. Intel said other chips remain soft and Andy Bryant tried to tone down the excitement with several well placed comments. He said it is unclear if the unexpected bounce in the early part of the quarter would continue in the coming weeks. He said their chip plants were running at nearly full capacity and they were experiencing some shortages. That is a problem he would love to face in light of some plant closings over the last couple years. They are leaner now and shortages would keep prices up. Part of the higher margin guidance is because they have not lowered their prices this quarter. This is a good sign that they do not feel pressured by lack of demand. So what caused the sell off? On the conference call Intel refused to give any specific guidance or answer any pointed questions. They said the bounce might only be a temporary result of the Dell price war in anticipation of back to school sales. There was some veiled rumors that it was the result of some channel stuffing and volume requirements of dealers to get decent prices. They repeated the claim that IT spending was not improving and they had limited visibility going forward. Considering they just raised guidance the conference call was anything but bullish. They raised our hopes and then popped our balloon. However it was not the first time this year for this to happen. In June Intel raised guidance with the following comment. "The company's Intel Architecture business is trending to the high end of the normal seasonal pattern while demand for communications products remains soft. All other expectations are unchanged". With that comment Intel gapped open and capped the end of a two week rally. In March Intel saw the exact same bounce into the guidance statement only they guided to the lower end of the range. The bottom line here is that it does not seem to make any difference what they say. The smart money has already bought the rumor and they sell the announcement. Note the SOX chart shows an even more drastic reaction to the Intel news. asianinvestoronline.com