Thursday, January 05, 2006

Are those Bull Snorts?

Are those Bull Snorts? Can you hear the snorts from the herd? The pawing of hooves? Bullish technology forecasts are flying around everywhere. You don't think so? The Philadelphia Semiconductor Index (SOX), at the time of this posting, is attempting to make a new 52 week high. Are we really off to the races? All systems go? The coast is (finally) clear? Well, starting the year with a bang is not all that bad. Have to admit, last year's equity performance was about as exciting as watching paint dry. Here's a quick run down on the performance of a few prominent names:
Company                 Symbol      '04 close      '05 close 

Intel                    INTC          $23.39        $24.98   
Texas Instruments        TXN           $24.62        $32.07   
Micron                   MU            $12.35        $13.31
Advanced Micro Devices   AMD           $22.02        $30.60   
STMicroelectronics       STM           $19.32        $18.00           
TSMC                     TSM           $ 9.91        $ 8.09
Analog Devices           ADI           $36.92        $35.87
Maxim                    MXIM          $42.39        $36.24

Applied Materials        AMAT          $17.10        $18.49
KLA-Tencor               KLAC          $46.58        $49.33
ASML                     ASML          $15.92        $20.08
Lam Research             LRCX          $26.35        $35.68
Novellus                 NVLS          $27.89        $24.12
Varian Semiconductor     VSEA          $36.85        $43.93
Semitool                 SMTL          $ 9.28        $10.88
Ultratech                UTEK          $18.85        $16.42

Cymer                    CYMI          $29.54        $35.51
Photronics               PLAB          $16.50        $15.06

Brooks Automation        BRKS          $17.22        $12.57
Asyst                    ASYT          $ 5.09        $ 6.16
Entegris                 ENTG          $ 9.95        $ 9.42
MKS Instruments          MKSI          $18.55        $17.89
Advanced Energy          AEIS          $ 9.13        $11.83

ATMI                     ATMI          $22.53        $27.97

Advantest                ATE           $21.40        $25.38
Teradyne                 TER           $17.07        $14.57
Kulicke & Soffa          KLIC          $ 8.62        $ 8.84
Cohu                     COHU          $18.56        $22.87 

Amkor                    AMKR          $ 6.68        $ 5.55
ASE                      ASX           $ 3.45        $ 4.49

Cadence                  CDNS          $13.81        $16.92
Synopsys                 SNPS          $19.55        $20.06
The '05 results, for many on this list, are nothing to jump up and down about. Honestly though, I don't think the mixed picture is the least bit surprising. Yes, throughout the year there were periodic flurries of activity on both the positive and negative side. I know a number of investors have been successful trading in and out of these (and other) issues. So, Bull or Bear? Color me this way: Friendly on a few of the industry trends. When it comes to the stocks, it really depends on the company. What I am listening for this year when I meet with companies is an emphasis on long term strategies - strategies that increase shareholder wealth. I know, that's something that should be a given but when you look at what has happened over the past few years chip and chip equipment companies have not been shareholder friendly. The little table detailing '05's performance only scratches the surface. The plan here is to do some major housecleaning. Our rather "idle" Model Portfolio - the one that actually beat the markets in '05 - is going to become brutally selective. Fundamentals will drive the decision making process. ------------------ During the the past few years I've talked about the transitions that companies in the chip industry are facing. This phase is not over by a long shot. A calendar movement is not going to make the challenges disappear. In fact, the pace of the industry's "rationalization, reorganization and restructuring" is intensifying. Don't expect things to become any less confusing. I'll be posting a lot and tweaking the site over the coming days. Drop me a note if you have any questions or comments.

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