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To: Ian@SI who wrote (1962)	2/8/1999 3:05:00 PM
From: Ian@SI	Respond to of 2946

Looks like with the lowest target PE, Merrill is looking for the highest %age gain from current price for SVGI of those stocks that they upgraded today. Table 1: Ratings Changes Rating 12 Month Target Company From To Price PE (CY Target '00) AMAT B-2-1-9 B-1-1-9 74 30 CYMI D-2-1-9 D-1-1-9 40 30 KLAC B-2-1-9 B-1-1-9 72 30 NVLS B-2-1-9 B-1-1-9 105 30 Table 2: Rating Changes Rating 12-18 Target Month Company From To Price PE (CY Target '00) AEIS D-3-1-9 D-2-1-9 33 25 LRCX C-3-2-9 C-2-2-9 44 25 PRIA C-3-1-9 C-2-1-9 50 29 SVGI C-3-2-9 C-2-2-9 25 20 What Has Changed? January SEMI-Equipment orders well ahead of expectations and look like they will accelerate through the year. Bookings will kick into high gear by the fourth quarter of 1999 when “capacity” buys become a larger part of the mix. We now expect semi cap-ex in 2000 to increase 40% yr-yr. Lean inventory in the channels, improving capacity utilization and cuts in cap-ex budgets is increasingly causing problems for the just-in-time (JIT) and build to order (BTO) models. Device makers are beginning to push back on system companies and contract manufacturers who continue to plan their business around 2-4 week lead times. Some one in the food chain will have to hold more inventory and plan longer term. When that happens there should be a surge of orders on device makers who in turn will begin to open the cap-ex spigot. The commitment to 300mm is moving back to the front burner. A widely anticipated announcement from Intel could galvanize two or three other semiconductor manufacturers to move ahead with 300mm projects. Taiwan Semiconductor Mfg is in our mind the next most likely candidate. Fab 6, their first 300mm project was put on hold 12 months ago.

To: Ian@SI who wrote (1962)	2/8/1999 5:53:00 PM
From: Ritz	Read Replies (1) \| Respond to of 2946

Ian: Re: "Now here's a surprise. Merrill thinks SVGI might actually do something..." No, that is not the surprise. The surprise is that SVGI actually did do something today (something good, that is, as opposed to the more characteristic do-do on the carpet). Even if the move consisted of simply following the rest of its pack forward; any sign of life from this, the perennial DOG of my portfolio, deserves to be recognized and rewarded. Accordingly..... Good Boy, Good Boy, Good SVGI!...There's a good SVGI! <vigorous pat on the head> -Ritz