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

To: Herschel Rubin who wrote (6327)	7/21/1998 12:12:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 10921

>>MarkFin: So they've gotten rid of more than just dead wood? Don't they furlough some who are likely to come back when revenues improve? As long as they keep one or two hard-working engineers around... they can support several middle-managers. << Equipment companies have never had an overabundance of deadwood, and they complain bitterly about personnel shortages whenever they aren't actively laying people off. Which means that there's a good chance that the engineer you furlough now will be working for your competitor when the next upturn hits. Katherine

To: Herschel Rubin who wrote (6327)	7/23/1998 9:14:00 PM
From: MarkFin	Read Replies (1) \| Respond to of 10921

Herschel, Many of the medium size equipment companies that I am aware of have cut 25-35% of their workforces through phased reductions. The main problem is that capital equipment manufacturing requires an infrastructure to engineer, manufacture and support the product. Normally, equipment companies have a hard time staffing up quickly enough to support the fab construction cycle so we typically run lean. This is also why profits are strong during the growth cycles. When the slowdown hits, our sales opportunities dry up very quickly. Remember that the order cycle is a 5-6 month process so it takes about that long to burn through the backlog. After that, it doesn't take too long before we cannot fund the infrastructure we just put into place (including our new process labs full of the expensive equipment required to sell the product). Then we quickly cut into a lean, highly skilled work force to keep Wall Street happy. It is one vicious cycle. MarkFin