BK
Re: Since we are at the start of an up cycle, AMAT will be awarded a higher multiple because strong eps % gains are around the corner and no MM worth his poceket-watch wants to be left standing at the station, waving as the train leaves.
How can you possibly think we are at the start of an upcycle at this
point in time? In 6 months, maybe, but I don't see any signs of
increased spending for capital equipment by chip companies on the
horizon. Don't delude yourself, things will get worse before they
get better, IMO. Earnings estimates are weakening in the tech sector
and the up coming onslaught of computer pricing as well as the,
soon to be, glut of foundry fabs/chips will insure that chip prices
are dirt cheap as competition for foundry business gets cut throat within 9-12 months.
It takes huge contracts and good margins/profitability to continue
to fund fab expansion and equipment purchases. There are few chip
manufacturing companies announcing very high profitability lately,
even the mighty Intel is feeling the earnings pinch. All that is
lacking is IBM making a negative or decreased earnings statement and
we could re-visit the '96 slump again, soon. In case you haven't
noticed DRAM, CPU, and commodity chip companies are floundering
in the rough seas of excess capacity and competive pricing, where
it's "every company for itself" just trying to survive the
ongoing turbulence. It is typical that when a company is trying to
compete and survive that they pull in the sails and run with the
rough seas while everyone mans the pumps, rather than trying to fight
against the fury of the storm. In other words, they cut back on
unnecessary expenses and eliminate overhead costs and make do
with what they have until things get better.
AS for the MM's/fund managers standing at the station waving as the
train departs, maybe they want to make sure it is the right train
before they get aboard. Does the ticket match the destination???
Just my opinion,
BB |
