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

To: Proud_Infidel who wrote (31407)	7/12/2006 11:50:56 AM
From: willcousa	Read Replies (2) \| Respond to of 95697

This article seems to be treating the SOX as a commodity. There are fundamental reasons why a commodity stays low for a long period of time like supply and demand. There is no fundamental reason for stocks to stay low for a long period of time when there is underlying performance. That being said, I think the stock option rip-off is hurting the shareholders in the market as well as directly.

To: Proud_Infidel who wrote (31407)	7/12/2006 12:17:54 PM
From: Donald Wennerstrom	Respond to of 95697

I didn't think I would ever see this - CSFB thinks the semi-equips are presently under valued. <<2Q06 SCE Preview Can we get past the peak, please? C2Q tracked at high end (no surprise). We think SCE companies will generally report June orders up ~10-15% q/q, this will represent ~5% upside to guidance of ~5-10% q/q. Projects that drove orders include (i) Micron (IMFT), (ii) Inotera (Fab 2 Ph 1), (iii) Powerchip (Fab M); expect these projects to offset declines from Samsung/Hynix in June. Expect front-end companies to report C2Q06 aggregate revenues of $4.70bb (up ~10.8% q/q), modestly higher than consensus at $4.65bb. C3Q up 0-5%; lumpy DRAM orders drive Dec orders down 10%+ q/q. Expect Sep order guidance of flat to up 5% on avg, generally inline with consensus; and June order upside should drive modest revenue upside in Sep (CS ~$4.97bb vs street at $4.89bb). What this means however is the “peak” order concern will remain an overhang for the next 3 months. Companies could smooth out large Inotera orders over 2 quarters; but ultimately lumpy Taiwan DRAM orders will take a temporary pause in Dec, and will not be offset by NAND order growth from Samsung/Hynix in 2H06. Expect ~10%+ q/q order decline in Dec; mgmt commentary on the Dec inflection – more importantly on the magnitude – will be a critical factor for stocks. SEMICON calendar (begins Tuesday this week) also included in this note. Memory will be a key focal point. Lumpiness of DRAM orders & seasonal trends in NAND orders will increasingly dominate SCE order books. But the fundamental memory cycle is healthy as: (i) Demand drivers – robust Moore’s law in NAND drives new apps through CY08 & Vista/handsets/game consoles for DRAM; (ii) Supply growth sanguine despite strong memory capex - 200mm conversions overstates memory capex by ~$5bb/year (see analysis); DRAM yield trends limiting supply growth. As always, chip company updates (SEC/INTC/TSM key), and inventories given recent weak demand will be important. Stocks trading below fair value, but need NT catalyst. Expect stocks to be range bound ahead of the up orders in Sep (peak argument) and lacking visibility on the magnitude of the Dec order correction. However, post this pull back, large-cap SCE stocks are trading at ~15.2x CY06/CY07 EPS (ex-cash that multiple is only ~13x). If CY06/CY07 represents “normalized” earnings for SCE (assuming CY08 is the next upturn), stocks are trading below fair value right now. However, fundamental catalysts historically have been necessary to move stocks back above fair value; thus valuation by itself is not a near term catalyst to buy the group ahead of peaking orders. BUT, given our view that memory cycle fundamentals are sustainable through CY07, investors with a mid to long term investment horizon can take a look at some SCE stocks to increase exposure to the strong memory fundamentals amidst the overall weakness in end demand. We expect NT catalysts (estimate revisions) to allow NVLS, CYMI, VSEA to trade up into earnings; and LRCX to trade down (street’s focus on Dec orders). However, LT investors can accumulate LRCX on pullbacks – still the best alpha among large cap SCE; reduce NVLS, VSEA into strength.>>

To: Proud_Infidel who wrote (31407)	7/12/2006 12:49:24 PM
From: The Ox	Read Replies (1) \| Respond to of 95697

See my previous post to RtS about the boom bust article. I agree with you 100% Brian, yet it is critical to look not only at the stock price (or SOX price) but to understand the company or sector's fundamentals. Right now, the earnings portion of the fundamentals are improving substantially but we have the massively negative overhang on the options scandals and insider give-aways (see: purely greedy bastards) to deal with. The market is always right but I want to find out where it may be looking in the wrong direction, so I can take advantage of it's temporary blindness.