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To: Jay M. Harris who wrote (4433)	1/15/1998 11:09:00 AM
From: Ian@SI	Read Replies (1) \| Respond to of 10921

Jay, RE: Ian, do you finally consider my posts as contrarian? Or am I the last bear to the honey bowl? Just curious...TIA, Ususally I try to avoid posting comments on an individual's motivations or the individual him(her)self. I can create enough controversy just dealing with the content. ;-) When you said, "... trust me when I tell you that the first half is not the issue. The second half is what these stocks are currently discounting. ..."; it sounded like, "I may have been wrong this quarter and last; I may be wrong for the next 2 quarters; but eventually, I'll be right, maybe." So at the risk of being even more offensive than usual, it seems that you are holding onto some beliefs which are not supported by reality at this time. There are scenarios which would indicate that reality will not support your beliefs within the next 2-3 years or longer. You seem to give these alternate scenarios a probability of zero while your bearish scenario is given a probability of 1. This may have nothing to do with your posts, but it's the way you come across to me. I wouldn't call it contrarian or bearish. Ian. P.S. Is it true that "Trust Me" is [favorite ethnic slur - i.e. English/French/Jewish/Polish/etc.] for "Screw you"?

To: Jay M. Harris who wrote (4433)	1/15/1998 12:03:00 PM
From: Ian@SI	Read Replies (2) \| Respond to of 10921

Jay, Lehman's view for 1998, FWIW. Ian. ++++++++++++++++++++++++++++++ * With 4Q EPS reports from Intel and Motorola, we now have updated U.S. capital spending numbers. The U.S. chip manufacturers we survey plan to spend 19% more in '98 vs. '97. This brings worldwide spending to -1% for '98. * Intel (INTC, $76 15/16, Rated 2 by Michael Gumport) plans to spend $4.6 bill., up 2% for 98, excl. the purchase of Digital Equipment's plant. If the Digital Equipment purchase does not go through, Intel will spend $5.3 bill. * Motorola (MOT, $57 1/2, Rated 1 by Todd Koffman) has spending pegged at $2.5 bill. for 1998, up from $1.2 bill. in 1997. The 1997 level was the lowest in years; the $2.5 bill. will nearly match the 1995 peak level. * The U.S. spending numbers are strong enough to largely offset an anticipated 36% decline in South Korea and an 11% decline in Japan, including currency. Our previous analysis concluded that worldwide spending would drop 4% in 1998. * The important issue for 1998 will be spending mix. A larger percentage will be spent on equipment versus buildings. Of the equipment purchased, the mix should shift heavily to 0.25 micron equipment. Highlights: 1. The key beneficiaries of 0.25 micron technology. Applied Materials (AMAT, $29 15/16, Rated 1); KLA-Tencor (KLAC, $38 5/16, Rated 1); Etec Systems (ETEC, $40 3/8, Rated 1); SpeedFam (SFAM, $26 1/8, Rated 1); PRI Automation (PRIA, $26 7/32, Rated 1). 2. Relative advantages. Asian equipment companies will have the currency translation advantage over U.S. equipment companies. But the U.S. equipment companies have strong relationships with U.S. chip manufacturers, which will represent a larger share of total spending in 1998.

To: Jay M. Harris who wrote (4433)	1/15/1998 4:58:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 10921

Jay Re:" The second half is what these stocks are currently dicounting. Many orders in equip land are still pretty firm. My overcapacity thesis is predicated on a second half pull back in cap ex." Jay, what has Mr. Market discounted the past three months with close to 50% declines on the average in the values of these stocks from their highs? Do you really think Mr. Market is so ignorant as not to realize now that there may be a blip in cap ex for a few months? Here is what Benno Sand said during the FSII cc about the month of December on December 22nd: "We have not seen any cancellations at this point of any significance. I think that what has happened is a lot of customers have kind of gone into a pause mode where they are trying to reassess their capital budgets for 1998 and maybe orders that would have released in November and December, they are now sitting on and evaluating whether or not they should move forward with those orders or not. So, I kind of use the analogy, it's like when my children are watching a video at home and one of them puts the video on pause and things kind of sit there for about 20 minutes. So I think we're going to see a couple of months of pause in the industry where perhaps the order pipeline will slow a little bit as some companies reassess how long this Asian crisis will last and what the impact is going to be on underlying telecom and PC growth rates for 1998." I think Mr. Market has heard this loud and clear. What if visibility clears around the same time as as there is a blip in cap ex? Don't you think it probable that Mr. Market will look past any possible blip in cap ex to 1999 at some point and discount that 1999 will be an excellent year for cap ex? Nobody has argued (yet) that 1999 is going to suck -- by all indications it is going to be a banner year. When the crossover from concerns about a blip (this is not certian either) in cap ex gives way the prospects of an excellent 1999, these stocks will move forward with or without you. Now I won't be so arrogant as to argue that my alternative scenario has a probability of greater than 95%. But I will say that this scenario has a greater probability than 5% and is just as likely (if not more likely) as your scenario. After all, we are all guessing (as you accuse Mason) and we are all participating in the "folly" of such guesswork unless you attach some sort of scientific certainty to your analysis.