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

To: SemiBull who wrote (6344)	7/22/1998 8:42:00 AM
From: Mason Barge	Respond to of 10921

To thread, re AMAT: I don't understand the consternation over AMAT's valuation and I don't think the street sees it as having a "monopoly" of some sort. Several people apparently don't recognize the importance of market cap and liquidity. This is not a problem that the small investor faces, but it is a major problem for large funds, who must insure that there position in a stock is not so large that, if the fund wants to exit its position, it won't cause a major decrease of share price. This ties with their desire to keep the number of issues at a minimum. AMAT's daily volume is, what, $200MM or so (the number is inflated by the NASDAQ listing but, in AMAT's case. less inflated than smaller outfits). You can sell $10MM without the stock nosediving. If someone sells $10MM in EGLS, it could knock the share price down 20% or more. And they don't want to follow more issues than they have to. There are some smaller issues here too, such as degree of analysis required, how many analysts follow the co., and the ability to take a large position without risking a 5% position. The clout of major funds is increased by the huge money pouring into them from baby boomers and overseas investors, and the fact that they MUST invest the money somewhere. Common stocks are very susceptible to the supply/demand model, and large caps are simply in higher demand for reasons that have nothing to do with future profitability. Also, AMAT has some strength in the breadth of its product line, which makes it a lot less vulnerable to a technological breakthrough by a competitor. If Coherent builds a significantly better 248um laser, Cymer is in major trouble. If someone edges out AMAT in one of its product areas, it might hurt the bottom line, but would not devastate the company's future. But the big factor in large cap vs. small cap valuations is liquidity, that is, how big an investment a fund can make without jeopardizing its ability to gets its cash out.

To: SemiBull who wrote (6344)	7/22/1998 9:55:00 AM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 10921

>> <<They have a better position at present than Semitool and CVC, IMO.>> In Cu electroplating tools?<< Just a clarification, CVC supplies MOCVD tools for Cu fill, not plating systems. AMAT claims to have demonstrated both a plating tool and a dry fill process, but is not selling either product at the moment. Semitool and Novellus are the only companies with announced plating tools at this point. You'd have to ask the original poster whether AMAT is better off than Semitool on plating. My evidence suggests that they are not, but he claimed to have other information. Katherine