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

To: Cary Salsberg who wrote (11733)	10/15/2004 2:28:24 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Heard on the Beat: Intel's CapEx to hit $4.3 billion in '05 C.V. Dee Silicon Strategies 10/15/2004, 11:13 AM ET Let the "Guessing Games" begin. C. William Lu, an analyst with Piper Jaffray, this week provided one of the first estimates of Intel Corp.'s capital spending plans for 2005. Intel is expected to spend $3.8 billion in terms of capital expenditures in 2004. The company did not comment on its 2005 capital spending plans in a conference call this week, but Lu is forecasting some $4.3 billion in CapEx for the chip gaint next year. That's good news for the chip-equipment industry, right? Wrong. Lu said there is a risk in the projection towards the downside. "We view the announcement as slightly negative for semiconductor capital equipment stocks," he said in a report. "Investors will likely focus on weakening demand for Intel Architecture products as an indicator for equipment demand. We reiterate our bearish stance on the group."

To: Cary Salsberg who wrote (11733)	10/15/2004 2:56:30 PM
From: Cary Salsberg	Read Replies (2) \| Respond to of 25522

I have read a 10/1/04 JP Morgan report Sam Citron emailed me and I have listened to INTC, LLTC, NVLS, and ASML conference calls (CC) this week. I usually read the Merrill Lynch (ML) research report on the quarterly release and CC as soon as it is released and then report here, but I haven't read them yet. I plan to and will post again. The JP Morgan report is a good place to start. In a previous discussion with RTS, I used the phrase "noise induced volatility" as a disparaging dismissal of semi equip behavior. I was surprised when I saw that JP Morgan had formalized an analysis of this "noise induced volatility" and was using it as the basis for future predictions of price movement. The analysis is based on inflection points in semi and semi-equip growth rates and market behavior that anticipates these. I came to two conclusions. One, this is what RTS has been asking for in fundamental analysis and he might find it useful to add to his TA and sentiment analysis. Two, I have correctly and accurately analyzed semi and semi equip business behavior since 2001, but I have ignored how the market will respond. The INTC CC was boring. I fell asleep that evening 15 minutes in and my wife woke me at the 30 minute mark. I listened to the whole CC the next morning. INTC business is more complicated than ever. Laptops, desktops, servers, motherboards, logic chips, communications chips, flash, 90 nm, 65 nm, 64 bit, etc. Analysts want to know how much things are slowing and if they will get worse. INTC doesn't know. Also, INTC results are influenced by market share gains and losses that blur its value as the representative for the industry. The market responded positively to INTC because they supported the view that there would be no industry downturn and the inventory correction will work through in the next quarer or two. The LLTC CC was not as much fun as usual. LLTC met the Q3 forecast, 5-7%, with 6% growth, better than the downward revision of most, but forecast flat to slightly down revenue in Q4. Flat is not bad after YOY results are up 45% for revenues and 50% for profits. They referred to industry forecast that expects analog to grow 13% compounded over the next 5 years and predicted LLTC will grow 25% compounded. Analysts were disapointed that LLTC did not quantify "slightly down". LLTC said bookings were lower so more turns business would be needed next quarter. They don't think this is an issues because because turns usually varies from 40 to 60% and last quarter was about 50%. The NVLS CC was downbeat as usual. CEO Hill doesn't know how to spin at all, so he lets the analysts lead the call. They ask, "what would lead you to believe that the inventory correction has become a significant downturn." He should be vague and broad in his reponse so that it appears to be a hypothetical answer to a hypothetical question. Instead, he says he is looking at flash memory and thinks that a fall in revenue would be a signal. This is narrow and precise and supports the idea that Hill considers a downturn likely. Nobody questioned why shipping levels went from $364M to $382M from Q2 to Q3, while revenue jumped from $338M to $415M. That jump is probably responsible for the forecasted fall in revenues in Q4. Shipping falls in Q4 to $315-330M because of the inventory correction. Since shipping has lagged orders, it is not surprising that orders will fall back toward the shipping levels. The ASML CC was very upbeat. They expect rising revenues in Q4 and Q1. The ASP of the backlog has risen ~20%. They are selling 300mm, 193 nm, high NA (numerical aperture) and are the leaders in these advanced tools and expect to extend their lead. They are improving gross margin, continuing to generate free cash flow, have the largest amount of net cash on the balance sheet in corporate history, have shipped the industry's first immersion tool. The settlement with Nikon frees them to accelerate their R & D and move further ahead of the competition while it provides no help to Nikon in the area of immersion.