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Technology Stocks : Semi Equipment Analysis
SOXX 299.81+2.7%Dec 19 4:00 PM EST
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To: Return to Sender who wrote (11366)9/2/2003 6:49:56 PM
From: Cary Salsberg  Read Replies (2) of 95617
 
RE: "The difference between now and 1998 is vast..."

I looked at S & P Stock Report for AMAT. Figures are for year end October.

Tangible Book Value: 1998 $2.11 2002 $4.87
Low Price: $5.39 $10.26
Current Ratio: 3.1 5.4
% Long Term Debt: 16.4% 6.7%
Cash: $575M $1285M
Common Equity: $3121M $8020M

Now these are balance sheet items, a measure of the company's worth,
not income statement items, a measure of current performance.
If one judges from these items, AMAT made a lower relative low in 2002 than in 1998.

I will grant you that the performance in 2002 relative to
the low price was much below the performance in 1998
relative to the low price.

The price that you can't accept is based on:

1. AMAT performance was due to external factors (bubble burst).
By all indications, balance sheet and product line, it is stronger
now than it was in 1998 and stronger now compared to its competitors.

2. The bubble was a single phenomenon which did not change the long term prospects
for technology and the semiconductor industry.
In fact, the prospects look brighter than ever.

3. The low interest rates make the lost opportunity cost of storing money
in AMAT much lower than the historical norm.

We don't need a "monumental recovery." That is good because
we will not get one for a few years. We need and it looks like we will
get a slowly accelerating recovery that will last longer than the historical norms.
In this environment, there will be modest corrections when prices get ahead of themselves,
but nothing that will be serious enough to be called
a "sell off."
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