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Politics : Formerly About Applied Materials
AMAT 338.12+2.7%12:19 PM EST
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To: Proud_Infidel who wrote (9059)10/21/1997 1:13:00 AM
From: Stu Bishop  Read Replies (1) of 70976
 
Brian,

Sounds like Geraghty is trying to talk the stock down.

We are not too far into the current growth cycle; the last two quarters AMAT showed growth, while the three prior to that showed falling revenue and earnings.. Last qtr revenue finally returned to the level of late FY95. If revenue for the current qtr comes in at $1B, FY97 will be 22% better than FY95 and 8.5% below FY96. To expect next year to be significantly better is only reasonable, otherwise this cycle for the semi equipment Cos will have been a baby cycle.

I do believe that in general, tech stocks are trading at higher multiples now. It seems that trailing P/E is ignored because they look too high. Buyers are using leading P/E more to justify paying these prices. Look at Lam Research. It's trading solely on prospects for improvement in the future. The same goes for PMCS, ATML, BAY. All of these companies are going through rough financial times, and are probably overpriced.

I have sold all four of these, and others that I believe were overvalued. I'm being much more selective and value concious in this market.

But I still own AMAT. I think it ran up too fast and won't go significantly higher than $50 until mid FY98. However I love it too much to sell it (full disclosure: I sold half at $39.5 a few months back before it peaked because I was too heavy into it).

I'm finding it harder and harder to find stocks I'm willing to pay for.

Later.

Stu B.
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