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

To: Jeffrey D who wrote (30251)	5/17/1999 6:14:00 PM
From: Henry Eichorszt	Read Replies (2) \| Respond to of 70976

From SmartMoney- 4:01PM Salomon Smith Barney analyst Milind Bedekar knocked the wind out of a few chip equipment stocks Monday. The analyst lowered his rating on shares of Applied Materials, Novellus Systems, KLA Tencor and Lam Research to Outperform from Buy. The analyst sees "air pockets ahead," as orders slow down later this year because of weak prices of memory chips, which are also known as DRAMs. "We believe that DRAM capital expenditure expectations will have to be revised modestly/appreciably downward towards the end of the year, while foundry/logic capital expenditures should continue a steady (but not spectacular) upward trend," said Bedekar in a report. "While we are by no means turning bearish on the sector (and hence the downgrade to an Outperform), we see a clear possibility of order flattening and a reasonable probability of modest order declines towards the end of the year and early next year." Bedekar downgraded Applied Materials even though he thinks that the company will report strong second quarter earnings Tuesday. "We expect Applied Materials to have a ‘Michael-Jordan'-like second quarter, beating expectations handily in every category," the analyst said. But given his outlook, its stock could see rough waters in the short run. "We believe that investors who are concerned with our order flattening/decline forecast should use the period after Applied's call to make the necessary adjustments," he said. "We believe that Applied Materials' stock will remain in the low 50's to 70 trading range over the next three to six months, as the effects of the DRAM price declines work their way through the chain and until we get visibility on the profitability/volume outlook for the 0.25 micron [chip]." MR