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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Steve Tauscher who wrote (20549)	6/18/1998 2:54:00 AM
From: Teri Skogerboe	Read Replies (1) \| Respond to of 70976

Steve, all, Thanks, those are some interesting numbers. Re: Negative Sentiment. We all know negative sentiment is an indicator that the stocks are probably "cheap", but using negative sentiment alone or as a primary "buy signal" could have gotten people into stocks like SEG when it was down from 64 to 32... sentiment was pretty negative (probably an understatement), but the stock went on to hit 19 over the next several months because the fundamentals of the industry were still "broken"... Just a fwiw thought. Not sure if you saw this story from SmartMoneyOnLine, a favorite of some on this thread -g-. SMARTMONEY ONLINE: Market Digest -2: Chips Finally, some good news from Merrill Lynch analyst Tom Kurlak. The long-time bear on chip stocks says that the fundamentals for the group will improve over the next six months. The reason for his optimism? Kurlak believes current cutbacks in chip production will lead to layoffs and reduced capital spending that will finally set the stage for improved profit margins next year. "December... may be the month that first reveals some tightening of semiconductor supply. This would start an increase in booked-to-billed ratios and firmer pricing with no change needed in end demand," he says. While chip stocks will no doubt decline in the near term, the analyst says "a buying opportunity is developing. We believe that over the next few months longer term investors should take advantage of the weaker stock prices we expect and begin to establish investment positions." Chip Equipment Shares of the semiconductor equipment sector rebounded after a few days of heavy selloffs. Last week, ASM Lithography warned that earnings for 1998 will be below last year's levels because weak demand overall is hurting sales. Given the high inventory levels and problems in Asia that are hampering a recovery in the group, some analysts have trimmed back forecasts of spending by chip makers. IBM Big Blue is also suffering from the worsening situation in Asia. IBM shares are down after Merrill Lynch analyst Steven Milunovich cut his second quarter earnings estimates for IBM by 7 cents to $1.45 a share. Other analysts will probably trim numbers as well, he says. The consensus estimate for the second quarter is now $1.50 a share. Specifically, Milunovich says IBM faces weak PC sales as inventories are reduced. It also has to deal with a transition in mainframe products and a double-digit sales decline in Japan. Milunovich says that other PC vendors will face pressure as economies in Asia continue sliding. Traders had their eyes on Hewlett Packard (HWP) as word spread on trading desks that sales are falling this quarter. Oil Stocks Shares of oil stocks recovered as the price of oil stopped sliding and sellers stayed on the sidelines. On Monday, the price of oil slumped to an 11 1/2-year low of $11.40 a barrel. On Tuesday, oil traded as high as 12.35. Additional oil production cuts from the Gulf Cooperation Council meeting in Riyadh, Kuwait, were less than expected, however. Though there is value in the oil sector, a full recovery is not on the horizon, especially if production isn't reduced. Telebras The financial turbulence in world markets is causing the Brazilian government to consider a second delay of its planned privatization of the large telecommunications company, industry analysts say. Besides the fact that Telebras' stock has fallen in sympathy with emerging markets in the last few weeks, the government is also considering a postponement because of the complexity of the sale and requests by bidders for more time to review the sale's terms. The proposed date for the auction is July 29, two weeks later than the original date. A six-month delay in the sale would cost the government $608 million in higher interest rates, according to Raul Velloso, an economist and former planning minister in Brazil. The Brazilian government plans to make $15 billion from the sale of controlling stakes in 12 units of Telebras. For a list of other SmartMoney stocks on the move in today's market, see the SmartMoney Gainers & Losers page. (For more information and analysis of companies and mutual funds, visit SmartMoney Interactive at smartmoney.com (END) 07:02 PM