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Sixteen analysts and top management from twenty-five sector firms examine the The Lehman Brothers Semiconductor and Computer Systems Conference in this special 126-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info414.htm.

TWST: How do you define the group — what’s included and what limitations or boundaries do you set on the coverage area itself?

Mr. White: I cover semiconductor capital equipment, a universe that includes those companies involved in manufacturing equipment for making semiconductor devices. I also cover a number of other companies in the electronics industry. Along with my team, I cover a total of 25 companies. My focus is on the US industry. Mark Regan covers European electronics and semiconductor equipment companies for Lehman Brothers in London. Scott Foster covers Japanese electronics and semiconductor equipment companies for Lehman Brothers in Tokyo. The semiconductor equipment industry is made up of several subsegments, distinguished by the stage of chip manufacturing that they are involved in.

TWST: When you look at specific companies, who bubbles up to the top?

Mr. White: Right now there are two larger capitalization companies that stand out in my universe as being particularly interesting. One of them would be KLA-Tencor (Nasdaq:KLAC), which is the leader in equipment for doing the inspection and measurement of structures on semiconductor wafers. The other interesting company is Applied Materials (Nasdaq:AMAT), the largest and broadest-line manufacturer of semiconductor production equipment worldwide. Through heavy investment in 300mm technology and entry into new market segments, we think the company can increase its market share in the next recovery cycle. Already, Applied Materials has achieved early success in the pilot production lines and research-and-development lines for 300mm tools, and this suggests that the company can take several percentage points of market share as the chip industry moves to high volume production of semiconductors on 300mm wafers. Also, Applied Materials is pioneering a lot of very important techniques and capabilities within the semiconductor industry. It was among the first to really build in precise machine control and diagnostics. It was also early in integrating the ability to do measurements on a semiconductor wafer while it was within a processing system, and has done a lot of work along the lines of integrating different process steps together to wind up with better results on the semiconductor wafer. All of these systems-integration initiatives make it possible for semiconductor companies to get better control over their manufacturing processes in the future, and that really helps to drive down their costs. On the new markets front, Applied Materials has entered the wafer inspection/metrology, process software, medium current ion implantation, wafer cleaning and reticle-writing market segments in recent years, and it may enter more before the next cyclical peak is reached. We think that, over time, these areas hold revenue potential for the company. If the next recovery cycle lasts until 2004 we think the market share initiatives, pioneering work in systems integration, and efforts to address new markets could fuel growth in Applied Materials’ revenues to approximately 20 billion. The efforts now underway to improve upon its internal efficiency could boost peak net aftertax profit margins to 25%, resulting in earning-power potential at the peak of about 5.5 per share. So Applied Materials is a company which we think has an extraordinary amount of earning power as we look out over the next few years

This special conference issue includes:

1) Investment Banking Outlook for Semiconductors - In an in-depth (4,100 words) Analyst Interview, Kyle Ryland, Managing Director, Christopher Colpitts, Senior Vice President, and Dan Myers, Senior Vice President, all at Lehman Brothers, examine the outlook for the sector and share specific stock recommendations.

2) Computer Hardware Stocks - In an in-depth (2,800 words) Analyst Interview, Dan Niles, Managing Director at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

3) Semiconductor Capital Equipment - In an in-depth (2,300 words) Analyst Interview, Edward C. White, Jr., Managing Director at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

4) Analog & Intellectual Property Semiconductor Stocks - In an in-depth (2,800 words) Analyst Interview, Seth Dickson, Vice President of Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

5) Communications Semiconductors & Optical Components - In an in-depth (2,800 words) Analyst Interview, Arnab Chanda, Vice President of Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

6) Internet Applications & Wireless IC Stocks - In an in-depth (3,000 words) Analyst Interview, Joseph To, Research Analyst covering Internet appliances at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

7) Semiconductor Capital Equipment Companies - In an in-depth (3,000 words) Analyst Interview, Ted Berg, Analyst in the semiconductor research team at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

8) European Semiconductor & Electronics Companies - In an in-depth (3,400 words) Analyst Interview, Chris Heminway, Managing Director at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

8) European Diversified Electronics - In an in-depth (1,900 words) Analyst Interview, Mark Regan, Analyst responsible for research coverage of industrial/consumer electronics and semiconductor capital equipment stocks within the European IT hardware team at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

9) European Diversified Electronics - In an in-depth (1,900 words) Analyst Interview, Mark Regan, Analyst responsible for research coverage of industrial/consumer electronics and semiconductor capital equipment stocks within the European IT hardware team at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

10) European Optical Components & Semiconductors - In an in-depth (2,000 words) Analyst Interview, Ulrich Pelzer, Analyst in the IT hardware sector at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

11) Asian Technology Research - In an in-depth (3,300 words) Analyst Interview, Matt Cleary, Senior Vice President at Lehman Brothers, examines the outlook for the sector and shares specific stock recommendations.

12) Asian PC Systems - In an in-depth (1,900 words) Analyst Interview, Paul Meyer, Vice President at Lehman Brothers, examines the outlook for the sector and share specific stock recommendations.

13) DRAMs, LCDs & SATS in Southeast Asia - In an in-depth (2,300 words) Analyst Interview, Donald Floyd, Senior Vice President at Lehman Brothers, examines the outlook for the sector and share specific stock recommendations.

14) Japanese Semiconductor Companies & Electronics - In an in-depth (2,100 words) Analyst Interview, Scott Foster, Senior Vice President at Lehman Brothers, examines the outlook for the sector and share specific stock recommendations.

15) CEO interviews (average 2,500 words). Top management of twenty-five sector firms examine the outlook for their firm and the sector.