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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: Sir Auric Goldfinger who wrote (590)	10/30/1998 8:02:00 PM
From: Tom Murphy	Respond to of 19428

From Merrill Lynch, dated 10/23/98 Semiconductor Capital equipment Sector - We think the sharp rally in semiconductor equipment/materials stocks is about to stall out. Weak fundamentals are likely to drag the stocks down 20-25% from current over bought levels. - Incrementally positive news from customers, semiconductor device manufacturers, during the third quarter conference calls has fueled the rally. But semiconductor equipment orders are unlikely to recover until the second half of CY99 at the earliest. - Semiconductor equipment sales are close to a trough after declining -69% yr-yr in September. We would normally interpret the current weak order pattern as a positive except valuations are at record levels when compared to previous trough valuations in 1996 and 1991. - Applied Materials is on track to meet its bookings guidance for 4Q98. But investors need to realize that Applied is targeting a small amount of business using steep discounts. AMAT is bleeding red doing it. NVLS, LRCX, and KLAC all missed their booking forecast in September quarter because of AMAT's strategy. - A recovery in semi-equipment stocks can not be sustained without a comparable rally in the PC chip stocks. The equipment stocks racing ahead of the device stocks suggests that investors are putting the cart before the Horse. Look to build positions over the next 6 months at lower levels. - The emergence of the low cost PC, crippled Asian semiconductor companies and persistent overcapacity are likely to result in a long drawn out recovery. FYI..the full report is available on-line at the Merrill Lynch Website.