Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 327.03

+2.5%

Jan 16 3:59 PM EST

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To: Gottfried who wrote (63575)	5/9/2002 10:52:15 AM
From: Cary Salsberg	Read Replies (1) of 70976

You are puzzled because the article talked about orders and stock price. The direction of orders and stock price are usually the same, but the relative magnitudes are controlled by the intermediates EPS and PE. The article had no EPS forecast and no suggested PE ranges. I have a good deal of trouble believing a forecast of $2.4B orders in the 4th quarter. That is a $9.6B annual rate, and an order rate 80% of the bubble top. These kinds of numbers support the analyst who predicted a severe but short spike up. This seems to be a case of projecting the current rapid increase until it becomes unreasonable and then cutting it off. It would take real analysis to explain the current rise in the context of overcapacity and slow technology growth. They would have to bore their clients with discussions of technology buys and the idea that during a slow growth period, the demand for new technology is strong.

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