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

To: Proud_Infidel who wrote (20943)	11/1/2006 9:02:36 PM
From: etchmeister	Respond to of 25522

Sign of the time? - to certain degree corporations have been held hostage by a short sighted Street that is more or less focused on a quarter to quarter view. 'Impatient capital' hinders U.S. IC industry, says ARC CEO Dylan McGrath EE Times (10/31/2006 7:57 PM EST) SANTA CLARA, Calif. — The semiconductor industry in the United States is challenged by "impatient capital" and an investment mindset focused on short term results, according to Carl Schlachte, president and CEO of ARC International. Speaking to an audience of mostly journalists at his company's ConfigCon event here Tuesday (Oct. 31), Schlachte said a focus on rapid return on investment (ROI) that has developed in the U.S. over the past 10 years or so has created a difficult climate for players in the semiconductor industry, where profitability requires both significant capital and a long lead time. Spoiled by the explosive initial public offerings of the dot com heyday, today's investors expect immediate growth in quarterly earnings and big returns on a very short-term basis, Schlachte said. "Nobody would invest in Intel if it were starting up today, because the return on investment would be too far out," Schlachte said. Though he could not recall the exact numbers, Schlachte said he recently read a study that concluded that the period that the average stock is held by an investor has shortened dramatically since the 1970s. Schlachte added that the rising prominence of hedge funds has skewed these numbers. "Risk capital in the Silicon Valley has become very short sighted. It's all about how you can get a 10X return from your Utube," Schlachte said, referring the pending $1.65 billion acquisition of the startup by Google. Schlachte said he wished investors would have the patience to look for long-term growth. In the semiconductor industry, he said, explosive and rapid ROI on the Utube scale is simply not possible, based chip design cycles that last roughly 18 months, short consumer electronics windows and other factors. For companies bold enough to build their own fabs, he added, the enormous cost of building and equipping the facilities, not to mention the minimum of two to three years required, make any ROI a much more long-term prospect. As a result, even chip companies that do get funding today have an eye on quick exit strategies such as creating a product line and being acquired by a larger player, Schlachte said. The situation is "a shame," he said, because so much of modern society—not to mention the high-tech world—is based on semiconductors. Nevertheless, Schlachte implied that he is optimistic about the future of the chip industry in the U.S., citing a wealth of creativity along with sales, marketing and engineering talent, as well as system "founded on optimism." He added that the U.S. has advantages in a strong educational system and infrastructure, as well. "This creativity applies to the capital markets as well as technology," Schlachte said. "We'll figure out how to make it work."