Aki,
SO tell me why should we buying amat at these prices
I'll bite. (warning: lengthy post)
1)
You wrote: I bring this up to draw attention to the myth on which the recovery of the asian financial markets is based... and it is on this myth that those who think that amat is now trading at its lows - given that wall street is forward looking (which is not supported by the facts) - rest their case... It says that korea, singapore, japan etc, have in fact weathered the storm. Seeing as there has been absolutely no time for any structural changes, this myth has to be based on the legend that the asian troubles are due to speculators like our man soros....
The following information could suggest that the Asian crisis drastically affecting AMAT may in itself be a "myth".
New orders for 1st fiscal quarter of 1998 geographically:
North America 31 percent
Taiwan 29 percent
Europe 19 percent
Japan 13 percent
Korea 6 percent
Asia-Pacific 2 percent
It looks like 79% of AMAT's new orders were from places other than those you mentioned unless Taiwan is included in the etc. If it was, it was a big one to not name directly. What if they lose half the orders from Japan, Korea and Singapore - thats 10% of the total of the new orders figure. I believe that the $.35-$.38 estimate is at least 25% below the original estimate - somebody help me out here.
Also, when I called Investor Relations I remember her mentioning that AMAT recently received an order for a 300mm plant in Taiwan. I did not catch exactly what she said because at the time I thought this was old news, but looking for info all I could find was an article about "Semiconductor 300" Project in Dresden, Germany. Does anyone have any information on an order from Taiwan. Also, I have read that Taiwan is really hot. I have not heard or read anything negative about Taiwan - has anyone else?
2)
You also wrote:
The other myth I'd like to address is visibility... and I gesss the two are related... Mgmt. said, if you care to think back, that they had "excellent vis." for two quarters... it seems to me that in fact they had decent vis, for one... lets look at the evidence... strong growth became no growth in two months... ambitious cap-ex expansion by amat itself is now accompanied by compulsory unpaid holidays (if you do not have the extra week owed)... we went from Bob and Stevie to squegee in three weeks.
I'll let Mr. Morgan start me off here.
Mr. Morgan wrote:
"Our customers have responded well to our ability to consistently deliver enabling new technology to the marketplace. Our extensive product line of proven 0.25 micron and below technology positions us well in assisting our customers as they migrate to more advanced device designs. We see this migration gaining momentum, as 45 percent of our new systems orders for the first fiscal quarter of 1998 were for 0.25 micron or smaller designs, compared to 19 percent just one year ago,"
This looks like growth to me.
and we all remember this article...
SANTA CLARA, Calif.--(BUSINESS WIRE)--Feb. 26, 1998--Applied Materials, Inc. has reached an important milestone with the shipment of more than 100 Silicon Etch DPS Centura systems within only 19 months of the product's introduction to the market. Achieving widespread customer acceptance, the company's decoupled plasma source (DPS) technology is currently installed in fabs at 17 of the world's top 20 semiconductor manufacturers.
More than 85 percent of the Silicon Etch DPS Centura systems, which represent nearly 200 process chambers, are currently being used in high-volume production fabs. Greater than half of these facilities are designed for 0.25 micron device production.
"The rapid acceptance of the Silicon Etch DPS Centura establishes it as one of the most successful products in the history of Applied Materials -- and the industry," said Joseph Bronson, president of Applied Materials' Etch Products Business Group. "Our DPS technology has set new standards in productivity and in providing customers with results that enable superior device performance. Both the Silicon Etch DPS and Metal Etch DPS products are now the industry benchmark for successful technology commercialization."
The market for dry etch equipment is one of the largest among all types of semiconductor processing technologies. According to Dataquest, the total market for dry etch equipment is projected to be approximately $3 billion in 1998. The silicon etch market segment encompasses a wide variety of applications driven by advanced capacitor structures, shallow trench isolation and complex gate structures.
This too looks like growth to me.
Granted some of the new technology may be put on hold by some of AMAT's clients, but exactly how long to you think these systems will be on hold for these clients? I have not seen the evidence that the ASIA problems will drastically affect AMAT beyond its already lowered estimate of this quarter. I have seen good evidence of ASIA trouble, but not much support for it affecting AMAT in the manner that has been posted. I have to believe that Mr. Morgan has the best knowledge of this and has given us his worst case number for this quarter. He knows there is no reason to give a best case number. They are in the best position to know what 98/99 holds - not us.
3)
In your opinion are these Broker recommendations worthless? What would your recommendation be? If I am correct judging from your posts, you would have a sell recommendation right now because we have not reached the bottom.
These Brokers must believe the upside far outweighs the downside as I myself believe.
Rating # Brokers
Strong Buy 10
Buy 7
Hold 8
Under Perform 0
Sell 0
Consensus (Mean) 1.920*
*(1 = Strong Buy, 5 = Sell)
Rating Changes # Ratings
# Ratings upgraded last month 3
# Ratings downgraded last month 2
4)
I am running out of gas, but would like to add one more thought.
IMO, the reason that AMAT's stock price appears to have no direction at the moment is that the Asia effect and the length of the Asia effect is unknown. I don't think anyone can argue that this is not a cyclical industry. It appears to me that with DRAM prices depressed and over capacity as it is, we are in the down part of the cycle. When does the cycle start up? What has to happen for the cycle to start up? I believe that AMAT will play a crucial role in starting the upward move. IMO, Over Capacity and no margins on DRAM suggest that newer technologies that come with a new cycle and also come with the better margins and are just around the corner. We all need to be looking for the signs. AMAT's stock price may be well on the way up before the up cycle gets into full gear if we are not careful. But, exactly what should we be looking for? Anyone?
Steve |
