Wednesday, November 10, 2004

Thinking alike

I don't really like to talk about stock upgrades and downgrades but there are two moves this morning that are noteworthy because we talked about these in the past. AMD is getting upgraded by Lehman since they believe that AMD will see improving margins due to manufacturing effeciencies and share gains. Stock has moved up in last few weeks. But like I said few days back, I believe AMD is a better play then INTC. Lehman did say that INTC guidance of 1-9% may prove conservative. I would think so since historic average is up 8% in Q4 and if you give yourself enough upside potential then there is a good chance of a upside, no? I am still worried about margins and enginnering missteps.

Second downgrade of my liking this morning is downgrade of Semi Cap Equipment industry by Morgan Stanley to Cautious from In-Line. Like I have said before, the Semi Cap Equipment industry has too much capacity, very little to no pricing leverage, shrinking customer base and capital efficiency is not there any more for Semiconductor manufacturers. These are more of a long-term issues then quarter to quarter issues, but these issues could drive the group multiples lower than past downturns.


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