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Politics : Formerly About Applied Materials
AMAT 260.77+0.2%Dec 24 12:59 PM EST
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To: Gottfried who wrote (65303)8/13/2002 4:58:02 PM
From: michael97123  Read Replies (2) of 70976
 
Zeev on amat earnings and prospects tonight

"Posted by: Zeev Hed
In reply to: mlsoft who wrote msg# 14885 Date:8/13/2002 4:52:45 PM
Post #of 14912

mlsoft, the surprising fact we should read in this and all of last year's report is that AMAT manages to stay profitable at half its normal running rate. If you consider the fact that in "good times" the industry spends about 15% to 20% of sales on new capacity, and that the run rate of the industry right now is at around $200 B per year, the most recent booking rate for the industry (at around $1 B per month) is just above half the normal expenditure rate. That will not continue for long. INTC this year plan to spend about $5.4 B on Capex (from memory) but their depreciation rate is well in excess of $6 B (also from memory). The point I a trying to make is that just as it was a question of "how much higher can the BTB go" (a question I raised in April 2000, thus suggesting a top for the sector), the current question should be how much lower can booking and billings go? And, if at these low rate AMAT is in the green, their profit margin could explode if shipment increase to even just 70% of the "norm" for the industry. It may take a little while, but I think it may be a little late to be extremely bearish on that sector. If it was not for "valuation" and the current ugliness of the charts, some of these companies could find a way in my "core"."

Zeev
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