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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (9948)	5/21/2004 1:00:49 PM
From: Bookdon	Read Replies (5) \| Respond to of 25522

The biggest threat to the semi-equipment suppliers,IMO, is consolidation among their customers. As the number of device manufacturers get down to a "shared monopoly" point, they can have terrific pricing leverage by controlling the timing of orders. In this kind of "granular" high-ticket-item business, shifting a large order by even one month can destroy the stock price of an AMAT. I know the kind of pressure that can produce. "Do you want to take a hit with this fiscal year results, or just shave margins a bit?" That is a tough problem, if there is not a device manufacturing competitor willing to snap up the order.

To: Sam Citron who wrote (9948)	5/21/2004 10:22:56 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 25522

I don't expect "prudent behavior" will assure that capacity perfectly meets demand. For short periods of time, some shortages or excesses will exist. Fortunately, semi cycles have been caused by huge excesses, and this can be remedied by deploying capital in smaller increments. The article you included talks about "commodity" industries that are capital intensive. The semi industry does not produce a single commodity, and while commodity pricing affects some types of semis, most do not exhibit commodity pricing characteristics. I think you are hasty in finding the second, no cycle, scenario highly unlikely. The bubble and its aftermath were not an "industry" boom-bust cycle and I am not suggesting that exogenously caused cycles can be prevented by prudent behavior. I give each scenario a 50% probability, but I give the second one a larger probability for the next 3 years. I haven't thought of any other scenarios.