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To: Patrick Slevin who wrote (10920)	1/27/1998 1:21:00 AM
From: Patrick Slevin	Read Replies (1) \| Respond to of 17305

Correction. I meant to say AV sold the puts naked.

To: Patrick Slevin who wrote (10920)	1/27/1998 11:08:00 AM
From: Andrew Vance	Read Replies (1) \| Respond to of 17305

AV -- I don't really do it on purpose but it is indicative of a newbie to an area that does not have a grasp of the acronyms, buzzwords, and catch phrases used in that arena. To me Slice is a citrus drink but to someone who works at TI, it is a round silicon substrate on which ICs are built. To me Wafers are the the IC substrate but to many of my friends they are either the things you dip in milk or have a priest put on your tongue. Every time I see ADI, I do not see Analog Devices Inc. but rather After Develop Inspection. After giving you 2 heart attacks over this, I will be extra careul in the future and spell out to the last detail exactly what I did. Youshould here the conversation with the broker over these trades when we do them. It's almost like we are doing brain surgery from the tesxtbook. We don't use buy and sell, we used open and close. I can't use the word dump but rather close my position.<GGG> ON THE SUBJECT OF DUMP: I just got off the WFR conference call and beleive on side of my tech triangle collapsed (INTC-AMAT-WFR)[IC Producer, Equipment Supplier, Key Commodity Supplier]. This year is not expected to be a good year. Volume is not going up commisserate with the new expansions taking place. The Japanese are trying to drive competitors out of business by dropping prices on the EPI wafers to absurd levels, Epi is not growing as fast as it was projected since higher quality silicon may meet some of the needs. Capacity is still abundant. Japane will be closing down some Fabs for 2 weeks. We are close to bottom on pricing with it now affecting future wafer expansions. The pricing of 8" wafers (150mm) is too low to justify building any more silicon producing plants. WFR has not provided any insight beyond 3 months. End users inventories are being reduced to almost dangerous starvation levels to generate cash. This year is going to be flat unless a miracle occurs. Brett Hodess from NationsBanc Montegomery Securities was about to ask a question but it became dead air. Seems to me he walked away from the conference call. Not a good sign if this is what Bret did. (BTW-Nations Banc Montgomery has this huge Technology Conference starting today, going out until Friday.) WFR is doing a great deal of cost containment but would have to rely on a $168 million credit facility to move forward on their stock repurchase program. Yep, they would have to buy their stock back on credit. BTW - capital expenditures for an expansion are in the neighborhood of $250 million, so their available credit facility is not big enough to fund another expansion(OUCH!!!). The only alternative would be another offering. With CFMT pre-announcing that 2 Korean unit shipments totalling $4.3 million will be push out and delayed, they will show a loss for this quarter to be reported. this is enabling technology. This does not bode well for any company that has Korean exposure. I know, Duh! Duh! Duh! but we are now getting the confirmation signals. Taiwan is still strong, according to WFR and a few others. Japan is in worse shape than we are being led to believe but Europe and USA are holding there own with little to no slippage. Down the road??? Very rocky and probably very volatile. Guerilla warfare will have to be used along with real time vigilance on the investments here. I see a great deal of overselling taking place that may allow for some dead mouse bounces (bounces smaller than a traditional DCB but enough to put 2-6% profits on the board). Safe havens: Probably the likes of PLAB, KLAC, ASYT and maybe one or two others. During these ensuing bad times (if indeed this is correct), there will be a great emphasis to do 3 basics things: Reduce costs, increase yields, and create a better mousetrap(IC). To increase yields you need to know what is causing the lower yields. Defect detection and analysis equipment can provide this (KLAC). To reduce costs by possibly reducing particulate contamination and possibly being able to progress to the next process technology, preferential SMIFing of equipment or areas (ASYT) would allow this to be dones cost effectively. Finally, even during the worst of times, design activity does not change and may even pick up as companies try to find a "silver bullet" to fill up their fabs or give them a competitive edge. One only has to look at the very competitive Video Graphics Chip and Graphics Adapter market to illustrate this. This design activity (PLAB). More to come later but as the Sargeant on Hill Street Blues used to say: "Be careful out there" Andrew Kevin-Just saw your post and came back to this one for a comment. I agree on CFMT but this is the same two units that slipped last quarter, I believe(???) or it is a Deja Vu all over again. Either way, I agree with both you and Patrick about another hit to the sector. I am almost forced to pick up some CFMT at 12.5 for a superb average down of stock, and just sit on it for the recovery. At this price, it is in take over territory. Problem is that no one may have the cash, desire, risk taking, or cajones to do it. BTW-see, we agree. So the fires of you know where are starting to freeze over<GGG>. Only difference is that I see it going across the board a littel faster than you seem to indicate. My beleif is based on the multitudes of companyies all in San Francisco this week attending and presenting at the Montgomery Technology Conference. These guys are in the top 3 investment companies in this sector.