Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 256.40

+1.2%

3:59 PM EST

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To: trilobyte who wrote (47222)	5/24/2001 5:42:02 PM
From: Cary Salsberg	Read Replies (2) of 70976

I question the assumption that bookings will improve enough in the September - March period to support current prices. The "no limit poker game" that everyone is depending on to spur equipment purchases in the face of low capacity utilization, was most applicable to commodity memory makers for whom cost/byte was everything and almost destoyed the economies of the SE Asian countries that borrowed and expanded without regard to real need. As far as AMAT valuation at $20B, $150 was based on a P/S ratio of 6. Since AMAT has net profit of ~20%, that is a PE of 30 and computes to $5 earnings. When you imagine a PE of 50 on earnings from cycle peak sales, I imagine an enthusiastic participant on the wrong end of the dot-com fleecing.

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