John, re AMAT earnings:
Analysts were projecting 25% q over q growth, AMAT's guidance was 15%, thus the dissapointment.
I didn't see that q over q prediction. Rather aggressive. Here's an article that attributes the dip last night to profit taking and disappointment over no split announcement. I've seen other super stocks, like Cisco do the same thing when they didn't issue a split announcement with earnings when some expected it. Of course, Cisco split later anyway.
Also in the article is a prediction for growth in the overall semiconductor industry by the Semiconductor Industry Association. Yesterday I was trying to find such numbers in response to Michael Bakunin, who was trying to decide if Intel, maybe the SOXX as well are price justified. SIA sees 20s % growth for the next two years, 12-ish for 2002. Not sure about the confidence factor, +/- % like the political polls use, but it must get fuzzier the further out you go. Anyway, 20+ for the next two keeps me holding my semis while looking for more "bargains."
Tony
Message 11981419
THE DAY AHEAD: Is there upside left in Applied Materials?
By Larry DignanTDAIN ZDII
Following Applied Materials' (Nasdaq: AMAT) torrid run in recent weeks, investors will be scratching
their collective heads wondering if there's any upside left. Aside from likely profit taking, the outlook is
promising.
Chip equipment maker Applied Materials, which is among the top tech bellwethers, definitely has upside
left.
First the bad news. Applied Materials shares could be weak for a few days despite stellar fourth quarter
earnings, strong sales of $1.57 billion and a nice order backlog. Part of the dip will be profit taking.
Investors may also be disappointed because Applied Materials didn't issue a stock split.
Applied Materials: More upside to come?
Add your comments to the bottom of this page.
According to analysts, any weakness will be a buying opportunity. Analysts have been bumping up Applied
target prices and earnings estimates for weeks.
Applied Materials' run has been nothing short of spectacular. A year ago you could have bought Applied
shares for 36. On Nov. 1, you could have bought Applied Materials for 87 3/4. In mid-August shares were in
the mid-60s.
So upside to the current 110 level is no small feat.
But there are a lot of reasons to be bullish.
Applied Materials is one of tech's giants, but it doesn't get the credit heaped on Microsoft Corp. (Nasdaq:
MSFT), Dell Computer (Nasdaq: DELL), Cisco Systems (Nasdaq: CSCO) and Intel (Nasdaq: INTC).
Don't let the number of headlines fool you though. Applied Materials makes all the equipment that
semiconductor manufacturers use to make chips. Telecommunications chips, PC chips and every chip except
for the potato variety use Applied's manufacturing equipment.
As the chip sector breaks out of one of its worst slumps, Applied Materials could benefit the most.
A recent forecast by the Semiconductor Industry Association predicted worldwide chip sales will jump 21
percent to $174 billion in 2000, with continued growth of 20 percent the following year to $209 billion and
topping $234 billion in 2002, with a gain of 12 percent.
And Applied Materials' outlook is just as bullish.
Applied Materials chief James C. Morgan said chipmakers' capital spending outlook improved with
economic conditions in Asia, better pricing for memory chips and tightening supply of key semiconductor
products.
"We believe that traditional sources of demand, such as personal computers, together with the emergence of
major new industry drivers, such as telecommunications, Internet applications and consumer sectors, will
continue to generate demand for semiconductors," said Morgan, in a statement. "These factors are expected
to fuel overall market growth in 2000.".
Morgan said the second half of 1999 was just the beginning of a capacity expansion for chipmakers, which
are converting to smaller manufacturing equipment and new technologies. Applied used the last
semiconductor slump to gain market share and get ahead of the technology curve.
The caveat with Applied Materials is that it lives in a feast or famine business. It's safe to say it's time for
the feast. |
