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

To: C_Johnson who wrote (14724)	5/2/2005 11:20:28 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 25522

>> If things are so great on the IC front why are WW bookings for capital equipment down so much for Q1? Carl, I have a theory about this very phenomenon, and I would appreciate your insight, if you're willing to give it. We're all wondering why the ratio of equip sales to chip sales is lower in the past 2 years compared to the nineties. It is around 18% now, and it used to be 22% then. I think the answer is that it was "too high" a few years ago, in the sense that chip makers were trashing perfectly good equipment for competitive reasons, and not because the equipment was broken or worn out. The competitive reasons basically were that another company was buying a more efficient machine, or one that could produce more powerful chips, so everyone in that industry had to trash their existing equip and buy the most advanced machines, else they would lose all their business. But the game has changed, apparently. Or that is my theory. It looks like one can stay in business without a mass replacement of their capital equipment every year or two. I can go on to the reasons why the economics have changed, but first I would like to know if you think this is in the right track or not. Briefly, the reason why upgrading all production lines to the latest equip is not so attractive is that margins are lower now than in the nineties. Back then it was OK to pay any price for equip, because they got very high gross margin from the product. Once the GM got lower, then why spend more money just to get mediocre margin. And besides, the instant chipmaker A gets the new machine, chipmaker B will get it also, and the advantage will disappear. So the competitive driver is less effective. Sarmad

To: C_Johnson who wrote (14724)	5/3/2005 2:42:50 AM
From: etchmeister	Read Replies (1) \| Respond to of 25522

Did IC sales actually soar? Because I am traveling I don't have unit volume numbers yet but I will have them shortly - as you know I track Monolithic Integrated Circuits - the stuff that is driven by leading edge technology - just like most of the good forecasters do. My bet is that this bounced, as it alway does at the end of a quarter. We'll see and I will post a chart when I get the data. Nobody expected to soar but most forecasters looked real stupid when Intel increased its capex based on 65 nm transition; so who else might have some meaningful production @ 65 nm: IBM, TI, AMD and Samsung/Tosiba/Sandisk moving towards 70 nm?

To: C_Johnson who wrote (14724)	5/3/2005 8:11:41 AM
From: Proud_Infidel	Respond to of 25522

Carl, Re: If things are so great on the IC front why are WW bookings for capital equipment down so much for Q1? I think this is the million dollar question nobody here really has an answer to. My simply theory is that people are still afraid to spend after 2000, even after seeing a rebound past 2000 highs in terms of IC sales. Some companies with deep pockets, such as Intel and Samsung, can overcome this fear and spend what is required. But leading edge capacity is booked out as I am sure you are all to aware. Re: Gottfried's upgrade/downgrade chart tells me little. How many analysts are in this survey? Is it all of the people that follow AMAT or those that are just quoted in the press? I believe it is a gathering of available upgrades/downgrades from all of the major brokerages, with no available data left out(ie. no selection bias). Re: You have to admit, those that are bearish have been correct about the direction of the stocks. I admit this all to readily, but submit this(thanks to Gottfried) to show there may be something else in equation....IMO, this graph backs up my "fear" thesis, except in this case it is individuals who are fearful of technology stocks: investorshub.com Brian

To: C_Johnson who wrote (14724)	5/3/2005 10:29:18 AM
From: Gottfried	Read Replies (4) \| Respond to of 25522

Carl, the analysts opinions shown in my year old chart vs AMAT stock price are those listed on Yahoo and on earnings.com You asked "If things are so great on the IC front why are WW bookings for capital equipment down so much for Q1?" Posters here have asked similar questions since after the 2000 peak. But it does not negate the fact that ww chip sales ARE near year 2000 levels, i.e. all time highs. [billings shown are not ww, just SEMI numbers] [http://home.comcast.net/~gottfriedm/SEMIcharts/chipsales_SEMIbillings.gif You can't use the low SEMI bookings to disprove that chip sales are near all time highs. A more pertinent question is "why do chip makers spend a much smaller percentage of chip sales on equipment than they used to?" home.comcast.net [again, equipment sales are from SEMI - not ww, but the method is consistent over the 10 years shown] Gottfried