re: Applied is in better shape than Cisco
Yes, most certainly.
AMAT understands they are in a cyclical industry, and has a track record of successful "contingency planning". CSCO is learning, the hard way.
AMAT doesn't do vendor financing.
AMAT manages inventory far better than CSCO. AMAT did, however, have to write off their 300mm R&D in 1998. Including that, earnings did go negative in the last downturn. I don't see why that should be taken out, since it is a normal part of doing business in this zero-visibility cyclical industry.
AMAT makes acquisitions when assets are cheap. CSCO makes acquisitions when assets are expensive, and only stops doing it (in 1998, and again now) when assets are cheap.
AMAT doesn't do the Creative Accounting that CSCO does.
AMAT doesn't do a side business running a Mutual Fund in kinky go-go dotcom/telco/network Concept Stocks. AMAT's profits come from their core business. CSCO's don't, and haven't for years.
By the end of this calendar year, it is probable that CSCO will be out of cash, cash equivalents, and short-term investments. They had 6.4B of it in 1FQ01, but it's all going to go away. If we get a recession, they are likely to be cash-flow negative, as well. Can't see AMAT ever being in that situation. |
