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 : Etec Systems moving up -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (996)	6/20/1998 9:31:00 AM
From: Dr. Bob	Respond to of 1279

Jeff, For starters, I think Bob's preceding post is an excellent partial answer, though I don't do TA, and I am not too confident about another 90 days before the upturn. This may be true for the industry as a whole, but ETEC has the potential to break away from the industry a little early, just as KLIC has done historically, because its sales should be driven more by total number of chips produced than by average selling prices for DRAM and the other conventional indicators. Here's my simplistic look at where ETEC would be "mispriced under any scenario". I start with the assumption that the number of chips produced, and their complexity, will continue to increase, albeit at more sluggish rates from time to time. My second assumption is that competitive products will take a least a couple years to ramp up volumes and customer acceptance, and that ETEC won't be standing still in the meantime, specifically that their new production facilities will be coming online, and new capabilities for smaller line widths will continue to be developed. This leads to a third assumption that their dominant position and running at full capacity, which therefore gave the ability to generate high gross margins, COULD change somewhat for the worse, but would not go in the crapper. If all this is true, I see no way ETEC's profits will decline, though the growth rate of said profits could - as indeed could be happening right now. If a more modest P/E is applied - say 15, at the height of the despair, and profits are nearly static at $2.00 - $2.50, then mid-30's is as low as this should go, and where I was really ready to load up recently, until (with your assistance) I thought better of it. Now, I don't know. I think it's a screaming buy anywhere around here, but it probably will be tied to sentiment about the semi equipt industry in general until at least a couple weeks before the next earnings announcement. Personally, I'm intending to load up June 30, when the end of the quarter selling for window dressing should be over, most of the pre-announcement season will be over, and the stock could be anywhere from 25 (even more of a bargain!) to 35 (signalling that the bottom has been reached and conquered). Unless, of course, you and the rest of the thread and subsequent developments talk me out of it! I will save some cash for late July, in case ETEC has a preannouncement that provides an even better buying alternative. Bob