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Politics : Formerly About Applied Materials

AMAT 301.11

+6.9%

Jan 9 9:30 AM EST

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To: Math Junkie who wrote (10420)	11/6/1997 10:33:00 AM
From: Cary Salsberg	Read Replies (5) of 70976

Richard and Thread, This morning's Mercury News attributes the following to Jim Morgan: "...putting the company on track to generate $10 billion in annual revenue by 2002." I assume that this is from the interview, but I didn't listen to it. Please confirm the accuracy as it is very important. IF the report is true, then AMAT will have a $4-4.50 EPS in 2002. Currently, AMAT is projected to earn $2.15 in 1998. Doubling earnings in 4 years requires a 20% compound growth rate. A long term 20% growth rate should yield a 20 forward PE multiple for a growth-cyclical capital equipment company like AMAT. This means that AMAT is FULLY VALUED at $43 and will be fully valued at $80-90 in 2001! IF anyone can refine expected profit margin and EPS for 2002, please do so. Also, please state any disagreement with the EPS growth rate/PE multiple relationship I proposed. Cary

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