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Strategies & Market Trends : Paint The Table
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To: AugustWest who wrote (12675)2/4/2002 12:12:08 PM
From: jcky  Read Replies (2) of 23786
 
It's not a pretty sight.

I can't believe GS just upgraded the semiconductor capital equipment companies.

< Analyst James Covella at Goldman Sachs has raised his rating on the semiconductor capital equipment sector to "market overweight" from "market weight," due to expectations that orders will rise for the next several quarters. >

What the hell has this guy been smoking? Just about every major chip company has been coming out and saying that they are cutting capital equipment spending. Does he understand what overcapacity is? Has this guy been to the same conference calls as everyone else? At the very best, the semiconductor capital equipment companies will be dead money for at six months.

I'll just say this. With this recent Enron debacle, Congress has been critical with accounting firms and the conflict of interest raised with their consulting and accounting services. Well what the heck do you think the investment banking and the sell side analysts of the major brokerage firms are? Chinese Wall, my ass....

Let's just take an example: AMAT. The analysts have AMAT earning $1.35 per share next year compared with $0.21 this year. With the current trading price of roughly $45, that's a forward P/E ratio of 33. And that's with a very rosy picture of $1.35 of earning per share next year.

I use to remember when semiconductor capital equipment companies traded in single digit P/E ratios in their down cycles. That's right, you're hearing me correctly. AMAT trading with a P/E multiple of 9 or maybe 11 or 12.
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