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To: Proud_Infidel who wrote (15026)	7/23/1998 4:43:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 17305

Brian: "GREENSPAN: ''I think, ultimately yes. History tells us that there will be a correction of some significant dimension. But what it does not help you very much on is when. Indeed, history is strewn with periodic contractions of significant dimensions and I have no doubt that given what human nature is, that it's going to happen again and again and again. How individuals behave in that particular environment is not clear or necessarily forecastable.'' Maybe Cramer should realize that anyone can make this kind of statement any day of the week. Maybe he should ask Greenspan for a translation for a "correction" or "contraction" as ask him to define "when." The fact that Greenspan has said this gives it a little more staying power than the average market pundit. And the fact that he said it with the S & P trailing P/E at or near record levels gave it more punch. P/E expansion is limited and we keep bouncing off the ceiling especially if earnings are shaky. Give it ten days and we all will have forgotten Greenspan's words. Bull markets make for short term memory problems <g>.

To: Proud_Infidel who wrote (15026)	7/23/1998 4:58:00 PM
From: Proud_Infidel	Read Replies (2) \| Respond to of 17305

Is now the time for equipment stocks? Silicon Valley: The End Was Here! By Marcy Burstiner Staff Reporter 7/23/98 3:11 PM ET SAN FRANCISCO -- Amid grumbling about the dismal chip market, continued worries about Asia and typically mixed signals from Fed Chairman Alan Greenspan comes NationsBanc Montgomery Securities analyst Brett Hodess standing tall and decisive. Now is the time, says Hodess, to buy semiconductor equipment stocks. "Until now, we've been saying, 'Don't buy the stocks,'" said the senior managing director for semiconductor capital equipment. "The stocks are flat now, but they won't get much worse. They will be bottoming out pretty soon." On the heels of Hodess' Tuesday morning call, Applied Materials (AMAT :Nasdaq) and Novellus Systems (NVLS:Nasdaq) rallied 4% in a weak market, though they gave up some of those gains Wednesday. His other choice chip equipment picks -- Lam Research (LRCX:Nasdaq), Teradyne (TER:NYSE) and KLA-Tencor (KLAC:Nasdaq) -- rose an average of 3.1% Tuesday. (Of those stocks, Hodess said his firm had not participated in underwriting for Applied, KLA and Teradyne and has not underwritten Novellus in four years.) The stocks were all down as of 3:00 p.m. EDT Thursday. The broader prospects for the sector are tied to the fortunes of the big chip makers, such as Intel (INTC:Nasdaq) and Micron Technology (MU :Nasdaq), which were decimated this year by the Asian economic crash that took millions of consumers out of the market for computers and other integrated circuit-based devices. The loss of that market created a huge oversupply in chips back home, and the chip makers reacted by slashing their budgets for new equipment. No one is predicting a reinvigorated Asian market just yet, but the semiconductor equipment industry has seen its darkest days, Hodess said. Still, no business upturn is expected until at least the second quarter of next year. He estimates that spending by chip makers on equipment will fall 19.3% this year, but then rise 4.9% in 1999. But a sudden upswing in the stocks could come soon because impatient semiconductor watchers are waiting for any sign of good news, he says. Hodess, a onetime senior product engineer at Intel, is widely watched on the Street and has made the Institutional Investor's All-American Research Team three years running. But not everyone is buying Hodess' call. At Merrill Lynch in San Francisco, analyst Mark Fitzgerald sees no upward movement any time soon. Fitzgerald reasoned that semiconductor equipment makers benefited from IBM's (IBM:NYSE) news this week that its PC inventories were shrinking and that PC sales should strengthen by the fourth quarter. "But the outlook for the next six months is very bad for the capital equipment sales," Fitzgerald said. "It's a seasonal blip, and we could see new lows." He said he hasn't changed his ratings for the industry sector, which have been holds across the board. To Hodess, the more stubborn bears like Fitzgerald are missing one important sign of better times: Intel's recent recommitment to its schedule for next-generation chips, which will require new equipment. There was even good news in the bad news of Intel's cuts in capital spending, Hodess added. "Cutbacks in capital spending have been so sharp, so aggressive," he said. "Before, everyone thought it would be a long, drawn-out process. People didn't know how to size the problem. But you have to amputate the arm to save the body. I'm looking at valuations of stocks currently and looking at how much of the bad news seems to be built into these valuations. It's likely that the valuations of these stocks are pretty low."