Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 226.05

+1.3%

Nov 14 9:30 AM EST

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To: Gottfried who wrote (26987)	12/7/1998 8:41:00 PM
From: Peter Singleton	Read Replies (1) of 70976

Gottfried, Here's my fairly uninformed opinion ... : ) These companies have crushing debt loads. They are essentially, or close to, insolvent, and cannot pay their debt under any reasonable scenario. For the companies to have a chance of operating as a going concern, they have to get out from under those debt loads. For the banks to continue to operate, they have to writedown their uncollectable debt, and if necessary, recapitalize somehow. This is kind of a macroeconomic exercise, essential for the overall economy. I'm not sure how the existing equity holders fare under this scenario (and we don't have enough information). I suspect in the big picture, anything that keeps the company going and gives it a chance to get through the economic crisis benefits the equity holders, since they'll end up with a smaller part of an asset that's worth something. Peter

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