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

To: Ian@SI who wrote (3815)	12/14/1997 6:43:00 PM
From: Investor2	Read Replies (1) \| Respond to of 10921

Question Re: "KLIC $15 - $45 Buy at 20, 18, 15 AMAT $12 - $25 Buy at 16, 14, 12 LRCX $18 - $54 Buy at 24, 21, 18 SVGI $15 - $32 Buy at 20, 18, 15 ASYT $ 8 - $20 Buy at 12, 10, 8." What do the first two numbers for each stock mean? As a clarification, are you projecting that AMAT, for instance, will trade within the range of $12 to $25 during 1998, and not trade outside of the range by a significant amount? Comment Re: "I looked at P/Book and P/Sales ranges for 1996 for a subset of the key companies - the most recent pessimistic year for Semi Equipment companies. From those ranges, I extrapolated a price range for 1998 assuming that its outlook is equally pessimistic." My first thought is that the method is probably as good as any, given these times of high uncertainty. However, the uncertainty for 1998 is probably greater than it was in 1996. I've heard 1998 projections that range from 1) a moderate reduction in corporate profits all the way to 2) global depression. Should the first scenario occur, appropriate buy points could be much higher than the 1996 lows. For that matter, the appropriate buy points could even be higher than current levels. Should the second scenario occur, the appropriate buy points could be much, much lower than the 1996 lows. Best wishes, I2

To: Ian@SI who wrote (3815)	12/14/1997 8:57:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 10921

Ian: Re:"I looked at P/Book and P/Sales ranges for 1996 for a subset of the key companies - the most recent pessimistic year for Semi Equipment companies. From those ranges, I extrapolated a price range for 1998 assuming that its outlook is equally pessimistic." So, then, does your lowest price level reflect the lowest P/B and P/S ratios achieved by these companies but recalculated for their present trailing four quarters worth of financial data? I do not agree that 1998 will be as bad as 1996, but that is just my opinion and probably not worth debating as your opinion is just as valid as mine. I do think the move to .25u will go on regardless of other semiconductor market conditions as you got to be compeatin' or risk being eaten, and that is the focus of my current investment selection. Re: "Essentially P/Book yields a "higher" low than P/Sales as well as a higher high than P/Sales would." I am not sure what this means as far as your methodology is concerned in arriving at your price levels. Re: " This would suggest to me that the downside risk in KLIC, LRCX and SVGI are limited at this point." Knowing nothing else about your methodology at this point and looking at the raw numbers from the table you posted this weekend as well as the April, 1997 lows, I would agree with this point. I would also argue that one should consider something more than P/S and P/B in selecting companies. Mr. Market has given us a trial run of how management has performed since 1996. Assuming that history repeats itself, I would focus on companies that managed themselves well since the downturn and take that into consideration just as much as I would consider a pure P/B and P/S analysis.