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

To: Jeffrey D who wrote (25938)	11/3/1998 1:39:00 PM
From: Jacob Snyder	Respond to of 70976

Philips Electronics' Shares Surge On Confirmation of Plant Closings November 3, 1998 By MARTIN DU BOIS Staff Reporter of THE WALL STREET JOURNAL Philips Electronics NV shares surged 9.1% after the company confirmed it intends to cut the number of its manufacturing sites by about a third. The Dutch company said it intends to reduce the number of factories world-wide to between 160 and 170 from 244 during the next four years. The reductions are expected to affect thousands of workers, mostly in high-cost areas in Europe and the U.S. Philips declined to elaborate on the employment or financial consequences. Investors cheered the news, which they interpreted as a signal that Philips is reducing costs in anticipation of a protracted period of depressed global economic growth. Last week in Hong Kong, Philips Chief Executive Officer Cor Boonstra described the outlook for 1999 as "very grim." "They want to make clear that they're being proactive," said Eric de Graaf, an analyst at ING Barings Research in Amsterdam. Union representatives, however, were dismayed by the unexpected announcement. "The impact on employment is totally unclear," said Philips union representative Dan Hermes. "But it looks like [Philips management] is getting ready at a quickening pace for worsening market conditions and price erosion." In trading on the Amsterdam Stock Exchange Monday, Philips shares jumped nine guilders ($4.83) to close at 108.40 guilders, after reaching a session high of 112.40 guilders. The news, reported in the Financial Times, came only 10 days after Philips announced a major retrenchment in the unwinding of a telephone handset joint venture with Lucent Technologies Inc. That same day, Oct. 22, Philips reported weak third-quarter earnings, with profit excluding extraordinary items falling 38% to 449 million guilders from 721 million guilders a year earlier. The money-losing venture with Lucent will cost Philips more than one billion guilders in operating losses and provisions this year. Ten days ago, Mr. Boonstra said the company expects to have 226 manufacturing sites world-wide by year end, down from 269 the year before. As of Oct. 22, Philips employed 147,000 people world-wide in manufacturing. The company declined to comment on which business divisions it intends to focus its cost-cutting. But analysts and union representatives expect the cutbacks chiefly to affect the company's lighting, consumer-electronics and domestic-appliance units. Older and smaller manufacturing sites, particularly in the Netherlands, where Philips employs 48,000 people, are expected to close or be shed.

To: Jeffrey D who wrote (25938)	11/3/1998 3:08:00 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 70976

Jeffrey: Thanks for taking the time to share the H & Q take. So what's the word? Mark Fitzgerald of ML is out there telling us the semi-equipment sector is not due for a turnaround and the stocks are ahead of themselves. And Jay Dehana of MSDW has downgraded his babies because they got too far ahead of themselves. Now H & Q is saying they are at the high end of their range and to buy on any weakness. So now the whole world knows these stocks have gotten ahead of themselves in the opinion of the experts and the big boys and everyone else have been put on notice of this fact. So, big mo and the other big boys have a decision to make -- hold or sell in the short term in the face of reality. I suspect those who are going to sell in light of this huge revelation have taken action to a large extent already in the short term. Moreover, I see relative strength in some of the small cap semi-equips. So I covered my shorts of KLAC, NVLS and AMAT late this morning. I might be a tad early but I don't want to be short too long in this market.

To: Jeffrey D who wrote (25938)	11/3/1998 4:13:00 PM
From: still learning	Read Replies (1) \| Respond to of 70976

How do your comments square against the following quotes from your H&Q post: * We believe the stocks are trading at the high end of their range and would use market weakness to accumulate the highest quality equipment names and we would not recommend paying up for equipment stocks at this juncture. We reiterate our Buy-on-weakness theme which we have emphasized all year. Our favorite names continue to be Novellus Systems, KLA-Tencor, Applied Materials, and ATMI.Introduction * Over the last several weeks, the equipment stocks have moved dramatically off their bottoms. When we published The Value Perspective, the top picks in our universe were trading at 2-3 times book value and 1.4-2 times trailing revenues. After appreciating 30%-50% they are trading at 2.7-4 times book value and 2.3-3.1 times trailing sales. The valuations are not as compelling at current levels and we believe value investors are likely to move off to the sidelines.