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

To: Pam who wrote (41943)	12/2/2008 10:21:36 AM
From: The Ox	1 Recommendation Read Replies (2) \| Respond to of 95616

Sure, but how can one even think about this when revenue and earnings estimates are still being revised downwards for buyers of semiconductor equipment? That is the key question, imo. It is the one that most people will miss and will only see the answer in hindsight. As we've seen in the past, if you miss the timing of this...if you only see the potential downside, if you only see downside when there are positives to be seen on the horizon, if you only concern yourself with safety, then you will only get answer right after these stock have had substantial up moves that can not be justified by the current, short term view. EDIT: let me add that you were correct in your view that the fundamentals would deteriorate for WFR...that the stock was telegraphing trouble ahead when the fundies were looking great. At some point when the fundies are awful, the stocks will start to telegraph the rebound. It has not happened yet. jmo TO

To: Pam who wrote (41943)	12/2/2008 11:40:10 AM
From: EACarl	2 Recommendations Read Replies (1) \| Respond to of 95616

RE "Earnings/share determine the stock price" Strange that I don't see companies with losses trading at zero. ;-) Point is obviously that EPS has nothing to do with stock prices once there aren't earnings. What to use then? Historical trough price to sales ratios? Net tangible equity? Net working capital? Net cash?! Estimated future recovery earnings? Some of these stocks already trade for less than the liquidation value even after taking into account future losses. It's all about psychology. At some point there will be more investors willing to look past the downturn and toward the recovery. At that point the stocks will rise. Will they anticipate by 6 months, 9 months, 1 year? I think it depends on how low we go. The lower we go the sooner the stocks will anticipate because the start of the rise will come from value players, then as the change in trend is seen others will join in regardless of what point in time the recovery is supposed to begin.

To: Pam who wrote (41943)	12/2/2008 11:54:45 AM
From: cluka	1 Recommendation Read Replies (1) \| Respond to of 95616

Pam, This is a deeply cyclical industry. Go back and look at bottoms and look at what sort of revenue drops and earnings were. These are the stocks you buy when PE is HIGH and sell when PE is LOW. Look at Gottfried's charts and you will understand. Revenue drop of 30% is nothing new for those that have followed SCE sector for a while. Your guide for buying in this sector is Price/Sales. Take a company, look at it's 2008 sales, reduce by what you think drop will be and figure P/S. When you compare P/S between companies, consider their historic margins, size, financial strength. For AMAT 2x at a depressed revenue number has never lost money. KLAC is close, LRCX somewhat lower. Question is if this cycle is different, has something changed, and by how much. Looking at the current stock prices market believes there is more to this downturn.