Semiconductor Capital Equipment Stocks Discussion

Top 371. Aug 12, 2000 1:18 PM

» Slick - I think this is...

(1) A case that this sector has been on a roll for awhile

(2) the due theory ie: fund managers believe that 'it's about time'

(3) they've got empirical evidence---Kulicke and Soffa

(4) they ignore "spinned" reports like AMAT and LRCX on there continued operations and backlogs

All just my opinion , Flippe, but as good as anyones. (:>)

Slick

-- posted by Slick

Top 372. Aug 14, 2000 5:33 PM

» Kirk - Someone should upgrade the analysts!

Note the date of the downgrade and results since....Nowonder they call em "Salmon Smith Baloney!

Analysts and the Semiconductors
From: fred woodall on SI
RESEARCH ALERT - Salomon cuts semi equipment cos
Reuters, Monday, May 17, 1999 at 11:52

NEW YORK, May 17 (Reuters) - Salomon Smith Barney said Monday it downgraded four semiconductor equipment companies to outperform from buy.
-- Downgraded companies are Applied Materials Inc. (NASDAQ:AMAT), KLA-Tencor Corp. (NASDAQ:KLAC), Lam Research Corp. (NASDAQ:LRCX) and Novellus Systems Inc. (NASDAQ:NVLS).
-- Said sees flattening industry orders at the end of 1999 and early 2000.
-- Applied Materials shares fell 1-1/16 to 59-5/8,
KLA-Tencor fell 1-5/8 to 49-7/8, Lam Research fell 1-5/16 to 29-1/2 and Novellus fell 2-11/32 to 51-11/16.

Since that time.
LRCX split 3 for 1 on (3 22 00) at $153
AMAT 2 for 1 (3 16 00) at $188
NVLS split 3 for 1 at $150

Didn't orders jump like 80% for LRCX and AMAT Year over Year?

-- posted by Kirk

Top 373. Aug 14, 2000 5:42 PM

» Rande - Roy Blumberg disagrees (from CBSM).

Roy Blumberg disagrees (from CBSM)....

Is semiconductor decline overdone?

NEW YORK (CBS.MW) -- For the last few months, semiconductor stocks have avoided the worst part of the decline in technology stocks. While most areas within the general technology universe experienced declines of as much 15 percent for the year, many semiconductor-related issues have moved sideways.

From the beginning of the year to the July highs, the S&P semiconductor group rallied about 40 percent, and as of Aug. 4, 2000, was up 15 percent for the year. In contrast, the S&P software index had declined by 15 percent and S&P telecommunication index was down more than 10 percent, on a year-to-date basis.

However, in the last few weeks, semiconductor issues joined in the overall technology decline. Probably one of the reasons for the recent decline in semiconductor-related issues was the Nokia (NOK: news, msgs) announcement that it does not expect to meet analyst estimates for the third quarter. The company claims that the shortfall is not demand driven but rather supply driven in that it cannot get its hands on enough chips.

In spite of strong demand, investors interpreted the Nokia news as a sign that semiconductor stocks would not meet their earnings estimates over the next few quarters, as a number of leading semiconductor stocks saw their prices decline sharply without reports from the respective companies that they would be experiencing problems in the coming quarters.

Reasons to be bullish

There are many reasons to be bullish on the semiconductor area. Manufacturers are finding many additional ways to use chips. Chips are becoming more complex, allowing manufacturers to generate greater profit margins. For example, demand from PC box makers remains stronger than many had forecast. Meanwhile, the demand from the telecommunications area seems to be accelerating, as wireless local area networks are becoming a reality.

Buying opportunity

A number of chip companies that we like are down sharply from their highs. Although we realize that there may be some additional selling pressure weighing down the stock prices over the near term, we believe this is a buying opportunity for investors. Below are a few names I feel are attractive over the long term.

Texas Instruments (TXN: news, msgs) is the dominant player in the digital signal processing (DSP) area with a market share of 50 percent. DSPs can be found in 70 percent of the wireless phones, VCRs, camcorders, cars and modems. Semiconductors account for 85 percent of TXN's sales. The stock price has almost been cut in half in the last few months, dropping from $100 to the upper $50s. According to Zack's, consensus earnings estimates are $1.25 for this year and $1.61 in 2001.

Vitesse Semiconductor (VTSS: news, msgs) is a leader in the production of high-speed chips manufactured of gallium arsenide. These chips are harder to make than silicon chips and are much faster. More than 80 percent of the company's sales are to manufacturers of high-speed communications and networking equipment. This stock has also seen a large drop in its price to the $50s from a peak of $110 earlier this year. Earnings should be sharply higher in the next year as street estimates (according to Zack's) call for VTSS to report EPS results of $0.65 for 2000 and $1.02 in 2001.

Both companies appear to have strong growth prospects over the next few years, and are selling at prices that are almost 50 percent below recent highs.

-- posted by Rande

http://www.siliconinvestor.com/stocktalk...

Top 374. Aug 15, 2000 9:36 AM

» Kirk - Positive Article: Semiconductors: Fewer Thrills and Chills?

The Whole Concept of a Chip Cyclic Is a Relic of the Past
-- Drew Peck of SG Cowen

Business Week, Aug. 21-28 Issue:
[warning. These "business cycle is dead" articles often signal a market top!]

Commentary: Semiconductors: Fewer Thrills and Chills?

Since its inception four decades ago, the semiconductor industry has never been able to defy business cycles that swing wildly between boom and bust. Even though chip sales have climbed at a steady 17% compound rate since 1959, manufacturing capacity has grown in fits and starts, always lagging behind or horribly exceeding demand. The current doozy of a boom, which dates back to late 1998, is no exception. With demand still skyrocketing, analysts are projecting a 77% industrywide profit surge this year, according to Thompson/First Call.

Moreover, until a few weeks ago, most everyone on Wall Street assumed that the good times would last until 2002. That's when they figured chip capacity would again outpace demand and prices would plummet. The near-term indications were certainly upbeat. All manner of chips were in severe shortage and prices were holding firm or trending up. Meanwhile, the Philadelphia Semiconductor Stock Index jumped 68% between Jan. 1 and early July.

MORE DIVERSITY. Then the bombs started falling. On July 5, two Salomon Smith Barney chip analysts cautioned that the industry could peak as soon as six months from now. Among the warning signs: creeping inventory levels, scattered price declines, and shorter waits to obtain some parts. Though rival Wall Street firms fired back with counter-arguments, semi stocks went into a funk. It didn't help that some analysts said cell-phone makers such as Nokia (NOK) and Motorola (MOT), who gobble up about 8% of all semiconductors, could miss their 2000 sales projections by about 10%. The Philly index has dropped 20% in the past month as investors raced for the doors. ''This is a cyclical industry, and nobody wants to be the last one out,'' says analyst Eric M. Ross of brokerage Thomas Weisel Partners.

But investors who bailed out of chips may be missing huge opportunities. The usual signals that investors watch to determine the end of the boom are no longer as telling. Why? The industry is no longer as monolithic as it was five years ago, when parts used in PCs set the pace. The business has become far more diversified. Now it derives most of its growth from new markets such as Internet equipment and consumer electronics--everything from data switches and cell phones to digital cameras and DVD players.

Already, soaring demand for such products is smoothing the ride on the semiconductor roller coaster. Indeed, ''the whole concept of a chip cycle is a relic of the past,'' argues analyst Drew Peck of SG Cowen Securities Corp. ''It no longer makes sense to tar the whole industry with the same brush.''

SPECIALTY CHIPS. The numbers bear him out. According to the Semiconductor Industry Assn., microprocessors and dynamic memory chips amounted to 38% of all semiconductor revenues in 1995. But by 2003, they'll represent just 29% of a much larger business. Meanwhile, other categories, such as specialty chips used in communication products and optical parts that speed the Net backbone, are growing far faster. ''New products and applications all over the world are driving demand for chips,'' says James Morgan, CEO of Applied Materials, the No. 1 seller of chipmaking equipment, which reported a 135% jump in quarterly profits on Aug. 9.

That's why most analysts are still bullish on a range of chipmakers. Among the favorites: Texas Instruments (TXN), National Semiconductor (NSM), and Analog Devices (ADI), all of which specialize in non-PC chips.

Which is not to say supply and demand won't get out of whack again. After three years of chronic underinvestment since the last glut, chipmakers are pumping up production capacity this year at a record rate. Capital spending on new plants will grow by upwards of 65% in 2000, to more than $50 billion. But until capacity catches up to demand--which could be another 18 to 24 months--investors have time to profit. Weisel's Ross figures the best performers could see 80% stock appreciation. That's a boom worth riding.

By Andy Reinhardt
Reinhardt covers chips from Silicon Valley.

-- posted by Kirk

Top 375. Aug 15, 2000 12:50 PM

» Happy - Glad to see those Lam shares up 20% in last two days.

Glad to see those Lam shares up 20% in last two days. Those shares I got at 22 7/8 are looking pretty good.

-- posted by Happy

Top 376. Aug 15, 2000 12:53 PM

» Kirk - GREAT buy Norm!

GREAT buy Norm!
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
Congratulations!
I wanted $20 for my IRA money... came up short
Still happy with my $24.40 shares but you have Jen AND I beat on this year's correction bargain basement shares!

-- posted by Kirk

Top 377. Aug 15, 2000 1:36 PM

» Happy - I think Jen said in chat that she got some Lam a little cheaper.

I think Jen said in chat that she got some Lam a little cheaper.

Funny, how you always have to look a little stupid before you look like a genius.

-- posted by Happy