Brian,
RE <6X sales is less expensive by far than either MSFT or INTC>
True, but that wasn't my point, and that is not a valid comparison.
Let's not bring other sectors into the point at hand.
I am comparing AMAT to other semi-equips, and compared to other semi-equips the P/S valuation and other valuation measures is extreme.
RE<And it should be noted that the 6X sales is using trough valuation measures, unfair for a company in a deeply cyclical business>
I did say more than that in the original post.....
"AMAT is trading at over 6 times sales, which normally 4 times sales is considered expensive. Even if sales increase by 50% (which they probably will over the next year or so) that still only puts us back to a still expensive 4 times sales".
So I did give the 50% increase near term due to the cyclical nature.
RE <They built up their cash position to nearly $2B while virtually every other company was losing money.>
$ 1.763 Billion actually. Of course AMAT has so many shares outstanding, it is only around $4.80 per share in cash , or around
8% of current price in cash. This IS NOT impressive compared to
many other companies in the sector. I'd be glad to supply a list of them, but I'm sure you already know.
RE <They provide the enabling technologies that nobody else can, and hold the key to the 21st Century and beyond.>>
Common Brian, you know as well as I do that AMAT has no product that
is far above it's peers in any area. It is simply that they offer a "one stop shopping" approach that no one else has right now. For example NVLS is better in CVD. It's not that AMAT is better, just bigger.
RE <You don't think this deserves a premium?>>
Yes, I do think AMAT deserves a premium. How much is the question.
10%, 20%, 30% OK, 50% maybe, 100%-200% NO WAY.
Summing up, there is no historical basis, nor is there any current basis when comparing other companies in the sector to justify AMAT
price recently anywhere between $55-70, UNLESS all the estimates are wrong and 2000 brings in earnings of 4$ per share. That would be double the previous peak, and I just don't see it happening.
Respectfully, Eric C. |
