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Politics : Formerly About Applied Materials

AMAT 301.11

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Jan 9 9:30 AM EST

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To: Cary Salsberg who wrote (10455)	11/6/1997 1:17:00 PM
From: Sam Citron	Read Replies (1) of 70976

Cary, What kind of standard deviation would you expect in a 5 year growth forcast by a CEO in a highly cyclical growth industry? 50% plus industry CAGR that occurred for 3 yrs prior to spring '96 could not last indefinitely. The semi capex boom climbed to record 31% of sales in '96, well over its long term trend line (now about 23%). Some analysts see completion of 0.35 mu expansions and lack of production-worthy 0.25 mu tools causing industry semi capex to fall below long-term average before a new cycle begins. Assuming semi capex declining to 21% of sales in the next 2 years, semi capex CAGR should average < 10% through 1999-2000. It will be interesting to see if JM addresses this possible scenario. SC

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