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

To: BWAC who wrote (32553)	9/12/2006 10:26:51 AM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95391

Here is the upgrade summary from CSFB. <<Upgrading to Outperform • Upgrading to Outperform. In a separate piece we also have out today, we are upgrading semiconductor equipment sector weight from Marketweight to Overweight. Our basic call is that although we are not early in the memory capex cycle, we think that memory spending will remain stronger longer than most investors expect. In conjunction with this call, we are upgrading AMAT from a Neutral to an Outperform. • Leveraged to the DRAM cycle. We think that memory capex will grow 10% y/y into 2007, driven mostly by DRAM capex, which we think will be driven by Taiwanese DRAM companies for the most part. Given AMAT’s broad product portfolio, AMAT has good leverage to all chip companies, including Taiwan DRAM. After spending a week in Taiwan, our checks suggest a pick up in order activity from memory companies which is improving AMAT’s visibility. In particular, we are a lot less concerned on AMAT’s NT business momentum into F1Q and F2Q07. • Not counting on any alpha. Our call on AMAT is largely a cycle call, and any meaningful improvement in AMAT’s portfolio approach to its growth efforts – service, FPD and solar – will represent further upside to estimates. We think it is too early to call whether AMAT will succeed in all its growth efforts; but we’ve argued this is the first time in five years that the growth strategies may have some potential for success. The alpha angle to AMAT’s story is worthwhile for investors to monitor, given the upside we already expect from cycle beta for AMAT. • Estimates and Valuations. We are leaving our F4Q estimates unchanged at $2.54bb and 30c; but are increasing our F1Q07 estimates up from $2.35bb and 29c to $2.48bb and 30c. For AMAT, looking just at quarterly order rates provides little framework for a sustainable investment thesis (as evidenced by the tight trading range on the stock in the last several years). That said, for what it’s worth, we now expect AMAT’s peak to trough order declines to improve, from down 27% to down 17%. We are raising our full year CY07 rev/EPS from $8.90bb and $1.03 to $9.85bb and $1.20, consensus is at $9.72bb and $1.10, and also increasing our price target from $18 to $20, representing an inline with peer-group EV/EBITDA multiple of 9.5x.>>

To: BWAC who wrote (32553)	9/21/2006 2:30:04 PM
From: etchmeister	Read Replies (3) \| Respond to of 95391

BWAC - too much gas Amaranth, which had more than $9 billion in assets earlier this summer, has lost nearly half that from being on the wrong side of natural-gas bets. The fund, which had soared from its energy trading operations in the last year, was betting on natural gas prices to rise; they instead have been falling. Like Moths To A Flame Liz Moyer, 09.21.06, 10:40 AM ET By This Author Liz Moyer • Banking On Brokers • AIG's Willumstad To Realize Lifelong Dream • Feeling The Heat More Headlines Popular Videos Ubisoft's New Games Toughest Travel Destinations Interview With Idol's Randy Jackson In The Market For A Castle? China Buyer Beware Most Popular Stories Gore Really Does Know The Web FDA Seeks Root Of Spinach Problem Flea Market Gold Lucas Makes Huge Donation To Alma Mater Moss Appeal Amaranth Advisor's misfortune may be the big opportunity that wannabe energy traders have been waiting for. On Wednesday, Greenwich, Conn., hedge fund manager Amaranth told investors it had transferred its energy portfolio to a third party. That party wasn't identified, but it was later revealed that the assets were sold to two entities: Citadel Investment Group, the $12 billion Chicago hedge fund, and JPMorgan Chase (nyse: JPM - news - people ). Now, Citigroup (nyse: C - news - people ) is considering taking a stake in Amaranth. Many Wall Street banks have been taking a look at the fund in the last couple of days. Citadel and JPMorgan are said to have taken on $2 billion and sold much of that to waiting buyers on Wednesday. Spokesmen for Citadel, JPMorgan and Citigroup wouldn't comment. JPMorgan has an existing relationship with Amaranth as its clearing bank. The scramble to buy the trading portfolios of Amaranth, to relieve it of exposure to volatile energy markets and perhaps to salvage what assets remain and keep it running, highlights the intense interest Wall Street has in energy trading. Many banks had gotten out of the market in the 1990s, seeing it as too volatile, and others never built up a capability. But that changed in recent years, as rivals enviously watched Goldman Sachs (nyse: GS - news - people ) and Morgan Stanley (nyse: MS - news - people ) rake in profits. In 2004, Merrill Lynch (nyse: MER - news - people ) bought the energy trading business of Entergy-Koch. UBS (nyse: UBS - news - people ) inherited 600 or so employees from Enron, the Houston energy company that collapsed in 2001. The Swiss banking concern winnowed that group down to under 100 before beginning to rebuild. Some star Enron traders founded their own firm, Centaurus Energy, in Houston. Citigroup has been hiring energy traders and has also set up an operation in Houston. Similarly, JPMorgan Chase has been building an energy trading desk, as have Barclays (nyse: BCS - news - people ) and Societe Generale (other-otc: SCGLY - news - people ). Bear Stearns (nyse: BSC - news - people ) has been building its own capability after a joint venture it formed with Calpine was scrapped earlier this year. The potential for huge losses doesn't seem to be much of a deterrent, either. Amaranth, which had more than $9 billion in assets earlier this summer, has lost nearly half that from being on the wrong side of natural-gas bets. The fund, which had soared from its energy trading operations in the last year, was betting on natural gas prices to rise; they instead have been falling. Amaranth was not alone in being wrong-footed, although its problems may be the most spectacular. In August, MotherRock, a $450 million fund set up early last year by the former head of the New York Mercantile Exchange, closed its doors, citing severe volatility in the energy sector. Last year, Citadel lost $150 million from bad bets on natural gas, and the head of its energy trading group, Steve Rose, quit. Ritchie Capital, another $3 billion hedge fund, was said to have lost $100 million around the same time. Another fund, Enchanted Rock, folded up after just nine months. JPMorgan's reported involvement in an Amaranth deal is curious given that the firm has been focused on reducing the volatility in its trading operations, having struggled with that issue over the last year. At an investor presentation in San Francisco on Wednesday, JPMorgan's Chief Financial Officer Michael Cavanaugh reiterated this desire to reduce volatility. But, he added, energy trading was a focus for the firm. "We were flat-footed there, but we have added to that space," he said. A call to Amaranth for comment Wednesday went unanswered. "We anticipate our year-to-date losses might be in excess of 35%," wrote Amaranth founder Nicholas Maounis to investors Monday. "We have met every margin call to date. We are in discussions with our prime brokers and other counterparties and are working to protect our investors while meeting the obligations of our creditors." Amaranth's troubles have renewed calls for greater scrutiny of hedge funds, even though the losses appear to be limited. Moody's Investor Service says the losses at Amaranth do not pose a risk to the credit ratings of the Wall Street dealers who do business with it.