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Politics : Formerly About Applied Materials

AMAT 230.92

+3.1%

3:59 PM EST

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To: Proud_Infidel who wrote (21079)	7/3/1998 9:54:00 PM
From: Justa Werkenstiff	Read Replies (1) of 70976

Brian: You gotta have sizzle to sell the steak and Lehman seems to be serving up its fair share. With respect to the 10B figure, Morgan has been selling this idea for quite a time. He says this will happen early next century. But in terms of a century, where does "early" come into play? 2010? Who knows and he is certainly not selling this idea as of late. Lehman says five years from now AMAT will be a 10B company. Where is the rationale? Without a rationale, it sure seems like a guess. During the past two FYs, I calculated that AMAT has had an after tax margin of 12.23% and 14.46%. If we take 13% and apply it to 10B, we are looking at $3.54 per share on 1997 shares outstanding. So in order to get to $7.00 per share, AMAT will have to double its after tax margins. Without knowing the underlying assumptions for this projection which are missing for this recommendation (i.e., increasing market share = increasing margins, increased chip demand = increased margins or one helluva buyback) it certainly seems far fetched. But it is sure nice to dream <g>.

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