Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Justa Werkenstiff who wrote (4460)	1/15/1998 9:29:00 PM
From: 16yearcycle	Respond to of 10921

Justa, This was fine reading; and not just because I am completely in sync with your thoughts<G> Thank you for this and previous posts on the semi-equip boards.

To: Justa Werkenstiff who wrote (4460)	1/16/1998 9:08:00 AM
From: Jay M. Harris	Read Replies (7) \| Respond to of 10921

Justa, to begin I would like to answer your Korean DRAM global market share question of several weeks ago. Montgomery Securities uses 35% to 40% of Global Dram revenue ($20 to $22 billion) as Korean. Justa, I agree with you that 1999 will be a very good year for the equips. I disagree that the market is looking beyond 1998. I have seen many well managed semi companies (ADPT & ALTR) taken out and shot by this market due to the markets inability to properly guage capacity and inventory issues. I liken equipment companys as the "second derivative" of a semi company. The business models are much more volatile than their clients (the semis). There are many reasons for this beyond the scope of answering your question. The bottom line is that inventory accumulation (INTC 28% sequentially in finished goods in q4) and component price declines (in excess of the 30% annual cost reduction attributable to Moores Law) are accelerating across all but 2 subsectors of semi manufacturing. This is causing semi cash flow problems which is used to fund equipment from tier 2 and tier 3 producers. This will become obvious to market participants during the next 6 months, and obvious to equipment management teams in the second half of 1998. In closing, I do agree with you that once the market discounts the above (lets say in June) the market will have discounted the deceleration in equip business models with an eye toward 1999. This is reflected in the strong correlation of the equips with the SOX. In closing, for the thread, the cycle is over! I hope my posts have helped people understand why, regardless of perspective or whether you agree or disagree. Good luck to all, I'm off to cable modem and ATM land. I will revisit semi land when valuations are more compelling. Jay