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

To: Math Junkie who wrote (7559)	1/13/1999 4:43:00 PM
From: yard_man	Read Replies (1) \| Respond to of 10921

>>my advice is to look to the small cap members of the sector, some of which are still pretty cheap.<< this would be very bad advice if there is not a true turn around -- as some of the the small ones may go belly-up. You make it sound that it is a given that overcapacity will turn into undercapacity -- there is ebb and flow, boom and bust, but as you or someone else has said here with a lead time of years on a fab -- the idea that overcapacity has been resolved that quickly seems a tad overoptimistic -- it's not enough just that some fabs were shutdown, but how much of overall production capacity was permanently removed from the picture and what is happening to demand at the same time. I think INTC may in fact be nearing an overcapacity situation now. PCs are not selling all that well (I realize unit sales are up -- but the growth in unit sales are slowing, while revenue growth is slowing faster because of falling ASPs) -- sure they've sold chips to the mfrs, but if the mfrs aren't selling PCs gangbusters then INTC will feel it and adjust its cap spending even further. Ingram Micro -- who sells more PCs than DELL reported slumping earnings and not so stellar sales for the last quarter, ICO -- same thing. Everywhere I look I see rebates on top of rebates. This isn't rebates on the 2k machines (action is now at the low end) -- prices are being cut in a huge way to move inventory. It's going to make it back to INTC in greatly reduced sales for Q1, as it will to DRAM suppliers and everyone else who provides chips to the PC makers -- then what will happen to projected capital budgets? Earnings would have to take a huge jump in order to catch up with the prices of NVLS and AMAT at this point -- enjoy the gains, but take 'em in the next month or two, IMO ...