Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 249.99

+3.1%

3:59 PM EST

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To: Proud_Infidel who wrote (21274)	7/9/1998 1:58:00 PM
From: Gottfried	Read Replies (1) of 70976

Brian, maybe I need a tutor for this? You said >GF is earnings per share plus R&D per share. His argument is that R&D spending is relatively stable from Q to Q, so when a company has lower earnings b/c it is spending much on research, the stock will appear cheap to investors who calculate GF long before it will look cheap to others on WS, which is totally focused on earnings. Let's say RD is fixed. Now I add a wildly fluctuating earnings number. The sum will be higher than EPS alone and will fluctuate less percentage-wise. So HOW do I see "cheapness" in the stock sooner? Put differently, if all earnings were used for R&D, I'd never know it by looking at GF. GM

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