Sam, so we all know what we're arguing about - here's what Neff said to Barron's...
Neff: I've got one short, Applied Materials. Like a lot of people around this table, I too think technology stocks have come back too far and too fast, particularly those areas that are capital-expenditure dependent. Applied Materials is one of the biggest semi equipment suppliers, and I think this company will earn nothing this year, as it has for the past couple of quarters. It is nicely financed, and has a very good balance sheet. But there are a lot of other tech companies in their customer base that need to get cash positive, which might happen by midyear. This company is capitalized at about $37 billion. Book value is around $9, and the stock is selling for $45.22, well down from its high of a little more than $100. But it's well up from its recent lows in the high $20s.
Q: If you're right, those people who have been buying the stock, expecting a big improvement in the semiconductor business, could face considerable disappointment.
Neff: The company will about break even for the next six, seven quarters. On the other hand, it's got a great balance sheet, with hardly any debt and cash of $4.7 billion. So it's not going out of business.
Q: In that case, we're all going to dinner. Thank you.<
I still say we have better collective knowledge of the industry right here.
Gottfried |
