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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: Howard Feinstein who wrote (13172)12/12/1997 8:31:00 PM
From: Proud_Infidel  Read Replies (1) of 70976
 
Howard,

At times like these I like to do some calculations just to reassure myself I am not going to be holding worthless paper a year from now, or a month for that matter. Let's do some math here. AMAT gets approx 45% of it's revs from all of SEA and 8% from Korea in particular. Let's assume Korea pushes out or cancels all orders for FY98. In addition, let's say that the rest of asia pushes out or cancels 50% of their orders for FY98. Europe and North America remained unchanged for this example. Using these VERY BLEAK estimates, revs for FY98 would fall short of expectations by 25.5%, well below the 50% decline in price we have seen over the past two months. In addition, some of this rev. shortfall could be made up with improved margins. My guess(I'm not going out on a limb here) is that Korea will not push out all orders nor will the rest of asia have a 50% push-out rate. At any rate, the selloff we have witnessed was not warranted to the extent it sold off IMO. And I am basing this on numbers I have enumerated, not on how I "feel" about AMAT. In addition, this SEA situation was getting underway when JM & Co. addressed analysts on Nov. 20. IMHO, they assumed some orders would be canceled and factored this into their FY98 eps forecast as best as possible. But for the SEA situation, we were looking at a $2.40-$2.50 year for FY98 IMO. Just my .02

Regards,

Brian
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