ramsey: re: "Japan's biggest problem":
I agrea, but I think the banking debts are just a result of two more fundamental problems.
The first is that the Japanese haven't learned the lesson that even the Chinese and Russian Communists finally came around to, which is that markets (not beaurocrats) are always the best way to allocate any scarce resource (capital in this case, but it applies equally to labor or raw materials). The human capacity for denial and rationalization is huge. Even as they teeter on the edge of disaster, they still are avoiding deregulation and transparency in their capital markets.
The second basic problem is their intense zenophobia. As long as their economic connection with the outside world consisted of shipping Made In Japan goods out, this wasn't a problem. But when they moved production overseas, they ran into problems. As a broad generalization, the investments they've made in North America and East Asia, and their attempts to manage foreigners, have done poorly. Japanese have a reputation for failure when investing directly in the U.S. And the idea of foreigners owning assets in Japan, and directly managing them, has been met with intense resistance at every level of Japanese society. This attitude is disfunctional in the Global Village.
The yen's value is a proxy for the world's confidence in Japan's ability to recover. Its slide, I think, is a big negative for the banks. Loss of confidence will overwhelm any positive effects. They are not going to solve their problems by devaluing and exporting their way to prosperity, because everyone else is trying the same thing.
No, it does not bode well for AMAT. I abandoned my "buy and hold" stance when I became firmly convinced that there were several really bad things that were inevitable, but hadn't happened yet, and weren't priced into the stock. And they still aren't, fully. If the stock slide had been slow and steady since fall 1997, I'd still be holding all my AMAT. But Mr. Market gave me the opportunity to get out at a late date and an excellent profit (of course, I'd have done much better if I'd figured this out last August).
I have no idea how bad the Y2K problem will be. However, it does create additional uncertainty, and we all know how the market reacts to uncertainty.
I also have no idea if AMAT will really make only 1.00/share in 1999. But that is what the analysts are beginning to tell the market. Let's apply Brian's method for estimating stock prices in the future: let's assume it's the end of 1998, and the consensus earnings estimate for the coming year is $1.00. Since EPS have declined from 1996 to 1997 to 1998, and now (expected) for 1999 as well, and there is no visibility beyond that, what kind of PE does such a stock deserve? A PE of 13 seems reasonable. So, a stock price of 13 doesn't seem unreasonable at the end of 1998. I now think I was exhibiting irrational exuberance last February when I guessed 40 as the end-of-98 stock price.
re: "Can some tech expert help me with some answers?" I am not a tech expert. But I think the stock prices will not be determined by "tech" issues. It's much simpler than that. It's an economic issue, a supply (too much) and demand (too little) problem. How many times have HiTech companies failed because they brought clever gizmos to a market that didn't have the need and/or ability to buy? It really doesn't matter how much progress AMAT makes in developing copper/300 mm/etc., if the semi companies aren't making profits. Morgan acknowledged this, explicitly, in the last conference call, when he said that development efforts in 300 mm were being "rationalized" in view of industry conditions.
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