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Politics : Formerly About Applied Materials

AMAT 249.89

+3.1%

Nov 26 3:59 PM EST

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To: Jacob Snyder who wrote (21111)	7/5/1998 7:13:00 AM
From: Justa Werkenstiff	Read Replies (1) of 70976

Jacob and All: One more fun fact for those who are hoping to get AMAT at much lower prices. When AMAT made its low on July 24, 1996 at a post split close of $11.25, the S & P closed at 626.64 that day. I calculate the S & P had a price to book of approximately 3.54x on that day and AMAT bottomed out with a price to book of 1.6x. If we take 1.6/3.54 we get .4520 as a bottom relationship of AMAT price to book to the S & P price to book. Well, at the close on Thirsday, the S & P had a price to book of 7.30x. Extrapolating the 1996 Price/Book bottom relationship to today, we get 3.3x book (.4520 x 7.30x). AMAT's book value today is $8.48 and multiplying it by 3.3 yields a share price of $27.98. So to the extent you think that 1996 is a different market than 1998 and if you account for those differences on a P/B basis as I have shown, there may not be much downside to AMAT barring a major market correction.

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