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Technology Stocks : CYPRESS Semiconductor (CY) -- Ignore unavailable to you. Want to Upgrade?

To: jelrod3 who wrote (1580)	12/12/1997 8:38:00 AM
From: steve host	Respond to of 2694

From Motley Fool last night - it appears that this stock, as well as others in the sector are undervalued. Cy is way under 2X book at this level so it is even more undervalued than the companies MF mentions. Thus I have to disagree with your analysis as to it going below $8 - this is a 2 year low for this stock . I have no doubt it will be back in the 12 range by the time the Jan effect takes hold. I'm buying up as much as I can get at these levels. If it goes to 8 I will take out loans to buy this stock - just look at their cash in the bank! FOOL ON THE HILL An Investment Opinion by Randy Befumo Asian Contagion Claims Another Semiconductor capital equipment companies underwent a savage beating today as investors fled industry uncertainty. A profit warning from Kulicke & Soffa (Nasdaq: KLIC) (N) (S) as a result of continued economic turmoil in Korea initiated today's debacle. Investors are concerned that economic upheaval in East Asia and Japan could cause spending for semiconductor capital equipment to dry up. Imploding currencies, massive debt loads, and slowing economies throughout the region could all contribute to lower capital spending. Many investors figure that if major Korean manufacturers like Hyundai are choking right now, things will only get worse in the future. Since the late October turmoil in Southeast Asia, semiconductor capital equipment manufacturers have been under pressure. The average semiconductor equipment manufacturer in the Motley Fool Semiconductor Capital Equipment Universe has dropped 14.0% so far this month. Even more shocking is the 38.6% haircut the average company in this group has seen since the fourth quarter began on October 1. Although as a whole these companies are still in positive territory for the year with a 24.1% average return, at this point these companies have underperformed the S&P 500's total return of 34.9%. Kulicke & Soffa re-ignited tensions this morning when it reported that it would not make fiscal first quarter earnings estimates $0.38 per share. The largest manufacturer of wafer assembly equipment in the world said Hyundai and another unidentified Korean customer had pushed out orders for 110 wire bonders, reducing first quarter sales by approximately $9 million. Hyundai now wants 80 of the bonders in question to be delivered in February, although these orders could be further delayed. The other 30 bonders are pretty much toast, as the company that wanted to buy them could not get a letter of credit. In addition, Kulicke is also having some production problems with its 8060 wedge bonders, which will shave up to $5 million more off the quarterly total. This is the first concrete sign from one of these companies that the Southeast Asian turmoil is more than hype. Although many took Oracle's warning earlier in the week as the watershed moment, for this particular industry the impact on Kulicke is much more relevant. In addition, Lattice Semiconductor (Nasdaq: LSCC) (N) (S) reported today that it had $3.5 million in revenues in potential jeopardy due to the insolvency of its South Korean distributor. As South Korea is the 11th largest economy in the world and constitutes about 10% of the sales of all semiconductor capital equipment, hairline fractures in the corporate infrastructure like this are a real economic event that creates some concern. Korea's most significant semiconductor export is memory chips. With the prices on memory chips still under siege and the Korean currency collapsing, it is not hard to see scenarios where companies like Samsung join Hyundai in pushing-out orders. Investors who remember the last downturn in semiconductor capital equipment are seeing some eerie similarities. When Kulicke reported push-outs by Taiwanese customers and problems with its 8020 turbo gold ball bonder in late 1995, this was the first sign of trouble for the semiconductor capital equipment industry. Although at the time Kulicke declared the issues short-term problems and continued working on a secondary offering, it turned out they were actually an excellent leading indicator for a downturn in the cycle. In retrospect, Kulicke's emphasis on the secondary offering was seen by many investors as an uncanny call on the top for the equity value of the company. As Kulicke had a three million share secondary offering back in May and now it is having problems with another key piece of equipment, some believe history is repeating itself. All of this fear has created the most attractive set of valuations on semiconductor capital equipment manufacturers in the last few months. With a variety of companies sporting solid balance sheets and starting to edge toward the low end of their historical valuation ranges, today's turmoil appears to offer investors the first compelling entry point since late 1996. On a relative basis the larger manufacturers have actually been hit harder, with Applied Materials (Nasdaq: AMAT) (N) (S), KLA-Tencor (Nasdaq: KLAC) (N) (S), and the decently diversified Teradyne (NYSE: TER) (N) (S) all trading for around 2.0 times their enterprise value (price). The five-year lows in the price/sales for these three companies are between 0.7 to 1.0, while the five-year highs range between 5.0 to 5.5. Although they have not hit near absolute panic valuations, the South Korean problems would have to kick off a major slowdown across all semiconductor capital equipment product lines to justify some of today's prices.

To: jelrod3 who wrote (1580)	12/12/1997 11:52:00 AM
From: Samuel R Orr	Read Replies (1) \| Respond to of 2694

Nice to have someone agree with me. Being married, I'm not used to it. I suppose a rational man would examine Cypress' new product portfolio, look at its percentage of SRAM sales versus other products, tell himself Cypress never had much pricing power on SRAMs, and jump in. That's hard to do, but as an old navy frogman, one is either in the water or not. The recovery period is hard to estimate. It would have to be six months to a year minimum, though Cypress will make every effort to stimulate non-memory IC sales. I like their cash position, respect TJ immensely, and realize he'll do all the intelligent things a good CEO could do. But TJ didn't cause the financial mess in Asia, and he can't remedy it either. To some degree it's a crap shoot. I still feel that the eight to nine dollar range is very attractive, and will soon be put to that hardest of tests: finding out whether or not a man can stand on his own principles.