Re: Lehman's pitch and various thoughts.
1- Negative sentiment is a wonderful thing, no doubt, but it is not "everything". It's not that easy.
2- Lehman has looked across several peaks and valleys and who knows how many market corrections to get to their $10B in Revenues and $7.00/EPS. From the $1.30 consensus estimate for '98, using a 25% growth rate, we reach their $7.00/EPS figure around the year 2004ish. We could probably debate the exact year, but it is pretty far into the future no matter how you slice it, IMO.
3- Justa is right that we need to look forward to anticipate things that have the ability to turn the industry. Reading today's news and accepting it at face-value isn't very helpful. As Big Bucks would say, we have to read between the lines.
4- I feel Ramsey is right that it will take a market event to shake the equips at this point. Much of the bad news is already priced in. That said, I still feel more comfortable buying the equips that are priced for possible bankruptcy (and have very strong balance sheets) than the ones that are priced for a turnaround within ~ 2 quarters, because things could still get worse.
5- Lehman's report could have been written a year ago or a year from now. It is close to useless, IMO. Any yahoo can buy AMAT at ANY PRICE (they had a "Strong Buy" on it 2 days from its peak in '97 and haven't changed the rating at any point since then to my knowledge) and wait for the next euphoric move north. Then the hard part comes, that any Yahoo may well can not manage and that's selling AMAT near its top. Lehman has not been helpful in catching close to the top or bottom. And, I'm sure there are those who will say it a "fool's errand" to attempt to catch near the top or bottom, and there is probably some truth to this. But the pay-off is too huge to not give it our best shot, IMO. Also, any yahoo may find the holding of AMAT (and other equips) through the depths of hell more painful than they imagined it to be and sell at the exact wrong time (...this has happened before).
6- Sorry to sound cold-hearted but these are stocks, not puppies. It doesn't pay to fall in love with stocks... well, maybe with MSFT, it paid.
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