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

To: Jacob Snyder who wrote (5720)	6/6/1998 10:16:00 PM
From: Clarksterh	Respond to of 10921

Jacob - I agree with your three choices for where you get the money for equipment purchases, and I agree that it would be incredibly foolish to spend your reserves on capacity expansion. However, probably the best thing to do with your cash in a protracted downturn is to spent some of it for productivity improvements and cost reductions. Either pay 10 million now to save 20 million over the next 1-1/2 years, or lose the 20 million anyway. BTW - this is not just my logic, but Morgan's observation about the spending patterns of semi manufacturers. Of course liquidity crunches can impede this, as happened in SEA. But that particular problem appears to be over for now. At this point I suspect that the DRAM manufacturers have enough liquidity to fund such improvements regardless of whether they have a positive cash-flow. And I don't think that the DRAM companies will use any cash they get out of artificially raising prices to buy more capacity. At least I hope not. Clark