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Politics : Formerly About Applied Materials
AMAT 225.82-1.3%1:10 PM EST
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To: Paul V. who wrote (50399)8/11/2001 12:58:49 AM
From: Cary Salsberg  Read Replies (1) of 70976
 
I have never shorted AMAT or any other stock. I am an intermediate term long investor. I sold some AMAT when it last hit $55, bought some back at $40.

I believe AMAT's price has held up because:

1. This quarter will be the first really bad quarter;

2. When this quarter's results were forecast, the street believed it would be the worst quarter and that results would quickly improve. When I last checked Yahoo's research, the revenue numbers still reflected this;

3. AMAT is the undisputed leader in semi-equips;

4. The street uses relative pricing rather than fundamental valuation. As such, $40 - 50 is compared to $115 rather than revenue and order levels. Part of this is based on the market's belief that things will improve shortly so revenue and orders are only transitory;

5. The street has not done critical analysis on the recovery and the recovery's potential is not reflected in the current price. Morgan is able to predict $20B in 2005 while the SEMI organization predicts that revenues will not exceed 2000 revenues until 2004 and AMAT did $10B in 2000. The recently posted prediction that AMAT has a peak earning potential of $3.00 is more in line with SEMI and my forecast of $12B in 2005 than Morgan's $20B.
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