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Wednesday, August 13, 2008

Applied Materials (AMAT) 3Q:2008 results

The order outlook of up 2-10% for Q4 is better than the street anticipated. The company says it will be driven by foundry, flat panel and solar. They expect memory to trough in the October quarter and for 2009 memory spending to increase over 2008 levels.

Believe it or not, the group has had a good run already. Lam (LRCX) was $31 in late July, its $40 now. Pretty much since Novellus reported and it wasn't that terrible, the group has had a positive tone to it. I had been covering in front of the Novellus number, though I remain short Varian (VSEA).

Though the rallies seem aggressive in light of the ongoing pressures in memory, semicap investors play long ball -- they're looking a year out. Applied and Lam have both suggested the trough is here and that tends to bring out buyers. Furthermore, the peaking and subsequent downward trajectory in the commodity and cyclical markets may bring funds outside of technology into the semicaps as they seek a new cycle to ride.

I think the semicaps are closer to a near-term top than anything else but I suspect they're buys on weakness at this point.

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