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

To: Proud_Infidel who wrote (14369)	1/10/1998 4:37:00 PM
From: Ian Davidson	Read Replies (1) \| Respond to of 70976

Just in case this hasn't been posted: techweb.com Ian

To: Proud_Infidel who wrote (14369)	1/10/1998 9:32:00 PM
From: davesd	Read Replies (3) \| Respond to of 70976

Brian....hope you are sitting down when you read this..... The 4 main reasons I have been bearish are... 1. Overcapacity 2. PC growth has been slowing 3. 300mm conversion looming on horizon 4. Asian problem Well alot of these things are still in place (in my opinion), however thing are changing. 1. Overcapacity....1996 and 1997 were years that countries were in a market share war with each other. Now that they have spent all their money and there is little or no profits to be had...they have cut back their spending. This is going to allow the demand to catch up with supply. There has been alot of cancellations and that is what the industry needed to get out of this glut. The semitool companies are going to hurt for awhile but when it's all over we will have a true upcycle again...none of this dead cat bounce like in 1997. 2. PC growth still sucks and I don't see much change there....I think other areas will make up for some of the slowness in the PC area. 3. 300mm...I was concerned that FABs will put off purchaces of 200mm over the next few years and wait for 300mm....well it looks like 300mm production systems have been pushed out till 2002 and further out. So FAB can't postpone purchases that long...they will continue to buy 200mm tools. Initially the migration to .18u was going to be on 300mm tools...well now the talk is that the migration to .18u will be on 200mm tools...they will not wait for 300mm. 4. Asian problems....these will work themselves out...if not...I'm sure that other countries and companies will build fabs to meet any demand that the asians can't build for. At this point commodity chip prices are really low and cannot go much lower...however they cannot go much higher either...or else PC prices and other electronic prices will move up and with the demand for these products already low...any price hike will further reduce demand. Therefore, the chip makers have to reduce the cost of production to make a profit...this is going to be hard for alot of fabs since they are strapped for cash...we will see some of them bail out of the commodity business or go belly up....this will set the stage for the survivors to have larger market shares and profitability. SO....in my muddy crystal ball...the next 2 quarters will be weak with sequentially down earnings and it looks like things will start picking up in late 1998 as far as order growth.....and since markets are looking 6 months ahead....the next month or two will provide good entry points for this industry.....Yes you are reading it right...this bear is growing horns....But I still think that we may see below $25 before we start up in ernest. Just to put my money where my mouth is....I advised my significant other to buy a 1/3 position in AMAT this coming week. Well I guess it really isn't my money...yet! <vbg> The other 2/3 should be after AMAT earnings. INTC conf call still has me nervous, I will wait for that before I decide to put in any more money into semitool companies. Also, I want AMAT and LRCX to admit things have slowed down. Kinda like...Hi my name is John Doe and I am an alcholic... If you were to see me tomorrow...I still look like a bear so expect more bearish posts. dave