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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Tito L. Nisperos Jr. who wrote (10130)	10/31/1997 10:35:00 AM
From: davesd	Read Replies (2) \| Respond to of 70976

Tito, Bears are not always short...they could be hanging out on the sidelines looking for an opportunity to add to their positions. At least this bear is. dave

To: Tito L. Nisperos Jr. who wrote (10130)	10/31/1997 10:42:00 AM
From: roly	Respond to of 70976

Tito, If you noticed lately, this stock "REFUSE" to go down further. During the correction last Monday, I believe it was only down by a little above 2. With the downgrades fo the big techies yesterday (Dell, INTC, CPQ), this stock was up mostly thru the day until it finally gave up the last few minutes of trading considering that INTC, DELL took it pretty hard. I would be nervous too at this time if I'm a bear or cover if I'm short, but ... we are not bears so we don't know the feeling. Like what you said, they have as short span to enjoy this downturn. So it won't be long listening to all the bears posting. For now, we have to admit they won and we have to just be on the sideline. Roly

To: Tito L. Nisperos Jr. who wrote (10130)	10/31/1997 12:43:00 PM
From: roly	Read Replies (1) \| Respond to of 70976

To All, Semi Equipement Forecat Opinion Merrill's report on the industry. Semiconductor Capital Equipment - 31 October 1997 2 Risks Worth Taking We think that US semiconductor equipment manufacturers are exposed to the Asian currency crisis in two ways: 1) The reduction in semiconductor end user demand. 2) The extent to which a strong dollar and increasing interest rates reduce the ability to finance semiconductor equipment. With regard to the first point we believe that the risk to US economic GDP growth is a slowing of one percentage point and Japanese GDP growth is 1.5 percentage points. However, GDP growth in the rest of Asia could be impacted from 3 to 6 percentage points and will vary from country to country. However, non Japan Asia accounts for an estimated 21% of the semiconductor market of which we estimate approximately half is exported. In other words about 10% to 11% of world wide semiconductor consumption is in non Japan Asia. Should consumption in this area drop even by an astonishing 25% then the world semiconductor market would decline by only an estimated 2% to 3%. With regard to the second point we think the key risks are in Korea and Taiwan. But, first of all there are three factors common to the Korean and Taiwanese semiconductor industry: 1) They sell semiconductors on the world wide market in dollars. 2) The semiconductor industry should become a priority of the governments in these countries the refocus of a limited capital supply may become necessary to minimize any impact of any economic slowdown. 3) We think that US backed financial institutions like the World Bank and the IMF may be willing to offer some help if necessary. We think that Korea is still the area of greatest risk since a good portion of that spending is believed to have been strategic. Such spending could be subject to reduction in times of stress. If Korean spending instead of growing by 10% as we expect in 1998 declines by 5% that implies a forecast that is 13.6% too high. Since Korea accounts for approximately 22% of world wide equipment spending such a decline would result in a world wide reduction in equipment spending by 3.%. We point out that in Korea the interest rate and currency effects have been mild with currency depreciation of only 4% in the last six months and interest rates essentially unchanged. In Taiwan the currency and interest rate effects have been more severe than in Korea with the currency down almost 10% and interest rates up almost 2%. But Taiwanese companies tend not to be very highly levered and have access to large sources of capital: 1)Foundry partners put up substantial amounts of cash. 2)Taiwanese companies can issue stock in foreign markets. 3)Many Taiwanese companies have already issued European currency based convertible bonds. Taiwanese investment is concentrated in the foundry business where it has been very successful and the DRAM business where it has not been successful but needs to be successful to increase its ability to generate exports. Thus, we think the Taiwanese commitment to the semiconductor industry will remain strong, and spending is actually likely to increase. Taiwan accounts for approximately 8% of the world wide investment in semiconductor equipment so even if the total investment ends up negative 10% growth instead of our positive 10% estimate in 1998, this world wide estimate decline by about 1.5% from our estimate. See Up To 5% Risk While some of the examples we have give are extreme we think that the total risk to capital spending for 1998 due to the Asian currency crisis is that growth slows by 5%, since while all of the spending declines discussed above may occur to some degree, we think that all of them are unlikely to occur to the maximum degree. Our forecast has been for 1998 spending to grow at 15% with a range of 10% to 20%, thus a 5% decline would be below our estimate but at the bottom of the range. In fact we are not changing our 15% growth estimate because our surveys of the industry keep generating figures that are robust enough to be consistent with our original projection. We would continue to add to semiconductor equipment stock positions according to our ratings.