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Politics : Formerly About Applied Materials

AMAT 268.87

+4.6%

Jan 2 9:30 AM EST

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To: J. Michael Moyer who wrote (1734)	8/29/1996 10:36:00 AM
From: Don Additon	of 70976

It is very easy to get blindsided by focusing too much on P/E ratios. The earnings are typically trailing twelve months results while the price is more-or-less current. The bottom line is this is a "stale" indicator and for the volatile SEM industry is worth very little. As an example, the mean of First Call earnings estimates for AMAT in FY 1997 (i.e., Oct. 1997) has dropped precipitously in just the past few months. * In late March the consensus was for a $4.61 EPS. * In late April the consensus was for a $4.43 EPS * In late May the consensus was for a $3.97 EPS * In late June the consensus was for a $3.81 EPS * In late July the consensus was for a $2.74 EPS * In late August the consensus was for a $1.82 EPS I see an extremely scary pattern here! In March, 1997 earnings were expected to be well above 1996 earnings - now the opposite is true. Yet the denominator in the P/E ratio does NOT reflect this at all! It continues

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