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Technology Stocks : Tower Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: virgil vancleave who wrote (534)	12/2/1997 9:08:00 AM
From: Gary Ku	Respond to of 1853

Good analysis, and hdco is a good example. Buy stocks when they are at unreasonablly low prices the rewards will be tremendous later on.

To: virgil vancleave who wrote (534)	12/2/1997 10:51:00 AM
From: slob	Read Replies (1) \| Respond to of 1853

Virgil, Good Analysis but not for Semi's. Semiconductors is one of the only real free markets that I know. They are so easily transportable and interchangeable, no one cares what stamp is on the case. This is especially true for the commodity "memory" end of the market. Flash and EEPROM are both commodity parts. They are seeing exactly the same pressures as DRAM market and infact swing very much in synch with DRAM's. Look at what happened to DRAM's between Dec 1st 95 and Dec 15th 95. Prices fell from around $12 for 4Mbit down to $6 for 4Mbit. Everyone expected a rebound but here we are 2 years later with 16Mbit DRAMs selling for under $4. That means that todays prices are 1/12th the cost per bit that they were two years ago. Now look at what this means when you own a company that has 29% margins during the good times. You can find that cash per share being replaced by Dollar notes shipped per chip, and this can happen in the space of a week or two. I don't think that TSEMF is a stock for the Value minded investor, you need to understand the market and be prepared to exit quickly before you get involved with a stock like this. Anyway thats just my opinion. Slob

To: virgil vancleave who wrote (534)	12/2/1997 3:21:00 PM
From: Omer Shvili	Read Replies (2) \| Respond to of 1853

Virgil, Your calculations do make Tower's stock seem cheap. However, you must remember that we're trying to forecast the future and we shouldn't count on past results that much. I do believe TSEMF is a good long term buy, but not such a great opportunity. Their Q3 margins of almost 28% - You're not going to see these anytime soon. Margins are going to drop considerabely over the next few quarters, and probably for the rest of '98. After talking with TSEMF's CEO I understand that Tower will be uhrt by the over-capacity in the market, which should continue well into '98. TSEMF wasn't hurt by this over-capacity in '97 because its main customers (Motorola and NSM mainly) send in exceptionaly large orders, and thus TSEMF was in a special situation in '97. However, this has changed, and now TSEMF is fealing this over-capacity, and sales will move lower. Since the Semi. industry is a fixed cost one, margins will drop considerabely as sales fall lower. Another thing one should remember - The currencies in the far east have dropped by as much as 50%, making it cheaper for the local manufacturers. This is not helpping improve prices in the world market. The fact that TSEMF hasn't even begun to build its new fab, it will be behind several competitors technology wise - ot good. They plan to get over this by moving to new products EPROM and flash. TSEMF might not soar as fast as many of you think, although I hope I'm wrong. Bear Stern's estimates for $1 in '98, don't seem too low anymore, and if things won't improve these numbers could even move lower. I'm following TSEMF for quite a while, and I am in constant talks with its management. I post my reports about TSEMF and other Israeli high-tech stocks at ariga.com but I'll also post at this thread, and on silicon investor from time to time. Omer