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Politics : Formerly About Applied Materials
AMAT 223.95+1.7%Nov 21 9:30 AM EST
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To: Joseph J. Clark who wrote (23964)9/9/1998 3:48:00 AM
From: Jacob Snyder  Read Replies (1) of 70976
 
re: sticking your hand into the abyss:

that's where you find the diamonds.

re: late 99 recovery: no one really knows. Anyone who is certain of their answer is overconfident. The only safe thing to say, with any degree of certainty, is that the recovery will happen sometime between early 1999 and mid-2000. That's why I'm buying 2001 LEAPs.

It is very expensive to hire and train workers, especially in Silicon Valley. The current unemployment rate for Americans with a college degree is 1.8% The unemployment rate for the kind of people AMAT will be hiring when the upturn happens is probably lower than that. They wouldn't be downsizing if they thought the upturn could possibly happen in the next 6 months. They must think the odds of that happening are near zero.

My best guess is that they have hit bottom, with orders of 600M/quarter. Morgan is sizing the company to break even (=zero profits) at that level. The question is, how long will we sit here on the bottom, with bookings (and soon billings) at that level? A lot of people are assuming that it'll be like 1996, where the recovery started as soon as the downturn bottomed. Maybe, maybe not. We might troll this bottom for a long time.
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