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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: molemania who wrote (3507)	11/15/1997 11:43:00 PM
From: Dr. Bob	Read Replies (1) \| Respond to of 10921

Mr. Fleming is cautious; I don't know his track record, but can't find anything to argue about in his analysis. Mr. Middleswart is bearish, but has no credibility when he says that "Historically, these stocks trade at book value or below" - which has only been true during bear market periods or selloffs, and even then (such as in late summer of 96), many still traded above book value. Mr. Pang was cautious, but has little credibility for me due to his track record at Smith Barney, where he missed the previous move up after the selloff of 96, so I'm not counting on him to help me figure out when the next move up will be. My money's on Cary's suggestion - Mr. Morgan is the person to pay attention to, and he'll be giving us his thoughts very soon. In the meantime, I find Carl Johnson's comments on Infrastructure much more credible. He missed the beginning of the move up last year, too, but he talks a lot with the companies, understands the business intimately, and puts his suggestions into a portfolio that you can follow so you can see his track record - and it's pretty darn good. I suspect Cary's is a little better, even, and I'll bet if you went back over these three guys' recommendations over the past year and put them into a portfolio and tracked how it did, they wouldn't have done nearly as well. They are running with the crowd right now, and an analyst can't get nailed too badly if he makes the same mistake everyone else made - but they don't help us much, either. Bob

To: molemania who wrote (3507)	11/16/1997 12:34:00 AM
From: Ian@SI	Respond to of 10921

Dave, Min Pang seemed the most credible to me - perhaps a little too optimistic at times. The bear demonstrated his lack of factual knowledge everytime he cited a statistic - the most glaring being the statement that these stocks trade below book usually. That only happens just prior to the bottom of the cycle and didn't happen for most chip equipment stocks during the last cyclical low. Personally, I tend not to follow analyst recommendations. There are far too many people front-running based upon hearing their views first. By the time they hold public interviews, much of a stock's move will already have been made. I'd much rather buy a good company when most others don't want it. e.g. - I set a mental buy target for WDC of 26. By the time, I saw it below that price, I picked it up at 22. (should have waited another day. :(( ). I expect to be quite happy within a year or 2 perhaps a couple months or so. If I were one of the privileged few getting inside info first, I would probably hold analysts in a much higher regard. I'm sure they're all nice people to have a drink with. I just wouldn't trust them with my money. Ian.

To: molemania who wrote (3507)	11/16/1997 1:04:00 AM
From: Cary Salsberg	Read Replies (3) \| Respond to of 10921

Dave, RE: "Those guys sound fairly credible to me." Those guys take the news that we are all aware of and go with the flow. They are either cautious or bearish. The problem with all of this is that conclusions are drawn from anecdotal data without attempting to formalize a methodology by which semi-equip sales forecasts may be derived. Under these circumstances, the best forecasts come from the sources with the best and most anecdotal data. Here is where AMAT shines. Their anecdotal data is the business plans of customers and their "formal methodology" is to sum customer's planned orders. Since a very large percentage of chip makers are AMAT customers, their forecasts make good industry forecasts. I am very uncertain about what AMAT will say next week. The DRAM price news and the SE Asia news are negative, but the DRAM situation has existed since the summer of 95 and the chip making industry in SE Asia can ill afford to not continually improve its technology. The argument that capacity purchases will slow or stop, doesn't directly address the fact that most of the purchases so far in 97 have been technology purchases. Also, most semi-equip companies have forecasted continuing, modest strength into 98 and the chip makers are expected by some experts to grow sales at a double digit rate next year. One would be forced to guess that the AMAT CC will confirm that semi-equip stocks were ahead of themselves at their August peaks and that current lows have overshot on the downside. My GUESS is that AMAT will predict about a $2.00 EPS for 98 on about $5B in revenues, and that AMAT will spend most of the next 6-12 months in the $35-45 range. Concensus forecasts for AMAT in 99 will start at about $2.20, down from current preliminary forecasts of $2.50-3.50, and AMAT stock will not move out of the $35-45 trading range until 99 forecasts begin to move up. I use AMAT as a standin for the whole semi-equip market. Other semi-equips results will reflect the slower growth scenario predicted for 98 and 99 and their unique company specific situation. Cary P.S. A previous post grouped me with Jim Morgan and Carl Johnson. This is terribly unfair, since I use their pronouncements and secondary sources to form my opinions, while they use and are primary sources.

To: molemania who wrote (3507)	11/16/1997 1:42:00 PM
From: Investor2	Respond to of 10921

RE: "What do you think of Justa's briefing article. Those guys sound fairly credible to me." Which ones sound credible? Min Pang sounds much more positive on the market, while Gerald Fleming sounds less positive and Jeff Middleswart downright bearish. I think we need to consider that Middleswart's view is probably influenced by the negative organization that he works for. I believe that Tice & Associates BEARX fund "invests" predominantly by shorting stocks. Best wishes, I2