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

To: Jacob Snyder who wrote (24833)	10/3/1998 4:03:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

great article, part 2: Q: What other tech stocks do you own? A: Novellus and Texas Instruments. TI hit our value range six months ago, when the stock was in the low 40s. It was a steal at that level, and still is undervalued at 50. The company sold its defense, computer and DRAM businesses, and raised $2 billion in excess cash. It has the financial wherewithal to withstand the current downturn in the semiconductor sector, and selectively has been buying other companies to fill in holes in its own technology. Texas Instruments has not used its cash to buy back shares. The company could earn about $1.50 this year, and north of $4 a share within three years. Q: Let's hear about Novellus. A: It's a leader in semiconductor-fabricating equipment which will enable chip makers to use the new copper technology. Novellus could earn a dollar a share this year, and could net as much as $3.50 at the peak of the next semiconductor cycle. The company earned $2.85 at the top of the last cycle. It has $100 million in cash, and no debt. Novellus has come down from a high of $66. Today we're paying $23. Among battered techs, we also like Seagate. Q: What's to like about Seagate? A: The company has great technology, and $700 million in excess cash. We understand that Seagate isn't earning any money. In fact, it could lose $1.20 a share this year. But the company has the ability to earn more than $2 a share in the next technology cycle. Q: The trouble with technology is that some companies -- and technologies -- never live to see the next cycle. They're rendered obsolete before the tide can turn again. A: That's one reason we rely on outside consultants for advice. After we comb through a company's numbers and do our financial analysis, we hire technology consultants to evaluate the company's products. We're looking for companies that are leaders in their particular fields. Discdrive technology isn't disappearing from the planet; rather, it's finding new uses. Eastman Kodak and Seagate recently formed a joint venture to use disc drives in film storage. Xerox uses Seagate technology in certain of its digital copier machines. There is always a risk with tech stocks. But there is also a price. Seagate has traded near 60 and, more recently, around 16. Sixty dollars was far too much to pay for so cyclical a company. The stock now trades for 24, and we think it's worth about $10 more.