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Technology Stocks : PRI Automation (PRIA) -- Ignore unavailable to you. Want to Upgrade?

To: guido leone who wrote (418)	5/15/1998 11:25:00 AM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 1214

fwiw, and not much, jim jubak (investor.msn.com) has finally run out of patience, albeit reluctantly. so much for longanimity. and what ever happened to value, pal! "I wound up deciding to drop two stocks out of Jubak's Picks in my spring cleaning. I found each drop pretty hard. Maybe if I tell you why, it will help you when you have to prune your own portfolio. I love PRI Automation's (PRIA) story. That may be the problem. The investment thesis is so compelling and so simple. As chip makers move to larger wafers and get more chips out of each wafer, each wafer gets more and more valuable. That makes it worthwhile to buy automated handling equipment to minimize damage to the wafers, and to buy tracking and scheduling software to run the equipment and to maneuver chips through the complex factory as efficiently as possible. Not only does PRI Automation make this kind of gear, but thanks to recent acquisitions, the company offers a one-stop shop for a chip maker looking for an automation solution. Yep, great story. And one that will pay off for long-term investors. I just don't see it paying off very soon. The downturn in the semiconductor-equipment industry is just far deeper than I expected. On May 12, Applied Materials (AMAT), the leader in the semiconductor-equipment industry, announced that sales for the quarter ending April 26 had decreased by 10% from those in the previous quarter. New orders were down 20% from the previous quarter. "Recent cutbacks in capital spending by most major North American chip manufacturers further limit our ability to determine the length and severity of the current downturn," said Applied Materials CEO James Morgan. The company, which had been using intermittent company-wide shutdowns to reduce costs and production, has recently offered employees a voluntary severance package in an attempt to cut 10% of its workforce. That's a huge step for Applied Materials -- where management vividly remembers getting caught short-handed after layoffs in 1996 when business unexpectedly picked up. So if this company is taking this kind of drastic action, its management must be convinced that the equipment industry hasn't yet bottomed. And I believe that Applied Materials knows. So I'm dropping PRI Automation. I'll bite the bullet. The story's great, but the timing couldn't have been much worse. PRI might be a great buy sometime in the future, but right now the stock is dead money, at best. I was wrong to the tune of a 22% loss, about $8 a share since I recommended the stock at $35 in June 1997. (Full disclosure: I bought the stock after I recommended it to you, I still own it, and I won't sell it until this column has been up for at least a week.) . . . Drop PRI Automation I just can't find the bottom in the semiconductor-equipment market -- and that means I don't see PRI Automation (PRIA) turning around for at least two more quarters, despite the company's leading position in equipment to automate the production of semiconductors. I recommended the stock on June 20 at $35.12 and I'm dropping it at $27.37, a 22% loss. I will continue to follow the stock and I'll alert readers when and if I find a promising time to re-buy." investor.msn.com