Replies to post #233131 on SwingTrade Member Forum (SWING)

[Rawnoc]

For two reasons we've been selling INTT....

(1) We like KLIC better as exposure to the chip industry. Similar potential but KLIC far less risk.

(2) We're stupid.


That said, I still own a small position in INTT and recently said to about it to somebody who asked my latest thoughts on INTT:

They had very bullish comments in their last public statement, but the chip industry in general is giving mixed signals. INTT at this price seems like a good risk/reward for say a 50% move over the next year vs the risk a 50% decline, I think the odds are very favorable for the long. The wild card is things turning around for the economy and/or the chip industry then INTT will prove to be a screaming buy in hindsight. Unforuntately I don't have much foresight at this time at least until November 2 then I think economic confidence could change fast. :)

[MikeDDKing]

The semiconductor growth cycle isn't what I thought it would be when I initially purchased. In part this is due to the slowing of demand for PCs. In the semiconductor equipment sector I think KLIC is a much better company to own which is why KLIC remains in the portfolio. Analysts existing estimates for KLIC are for 2011 EPS of $1.75 or a forward PE of 3.5. Also, KLIC's book value will likely hit the current price by mid 2011. By contrast, INTT's balance sheet is much weaker. Earnings for a company like INTT are much harder to estimate for next year. KLIC also is benefiting from the transition from gold leads to copper (technological change driving sales) which gives them growth beyond that caused by booms in semiconductors.