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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Jeffrey D who wrote (5253)5/20/1999 10:44:00 AM
From: Justa Werkenstiff  Read Replies (3) of 15132
 
Jeffrey: Re: "I was wondering why Justa had not made comments on the AMAT earnings of yesterday or the BTB numbers of today when I had a sudden realization."

Actually, Marc asked me about the AMAT earnings and I asked him what in particular he wanted to discuss and I never heard back from him. He must be too busy counting his money <g>.

AMAT numbers were spectacular and Wall Street is like a deer caught in the headlights. They must be saying: "pinch me, this is too good to be true." But analysts had to revise their earnings upward. They had no choice. AMAT beat estimates by a dime and guided the analysts upward to .50 - .54 for this quarter with sequential order growth.

AND THIS RAMP IS FASTER THAN THE 1997 RAMP NOW after looking at the BTB last night.

So being stuck in the headlights, some started to try to poke holes into the outlook. "Oh, but tell me Mr. Morgan, how much order growth re we talking about," asked one analyst. "No comment but there will be sequential growth," said AMAT. I think that is a pretty gutsy call considering the orders come in at the end of the quarter, but analysts seem to want the company to report this quarter now and the fourth quarter next week. How about DRAMs. Oooooooh, the prices are going down. REALITY CHECK TIME. Analysts should have been concerned about this prospect back in February when 64 meg was going for $9.50 and not now. DRAM pricing can change just as quickly the other way. So the SSB analysts is a day late and a dollar short because that was the time to tell your clients to unload some if this was your concern. Yeah, if DRAMs are down now you should be worried about them going up. And they may want to check the cost structure of the DRAM manufacturers where many are profiatble at $4.50 per 64 meg device so many are profitable now. But maybe the analysts should assume that all DRAM manufacturers are morons and are hell bent on driving their companies into bankruptcy so soon after they almost did it last year. This is contrary to human nature. But don't tell the analysts that AMAT is not your mother's DRAM company. Don't tell them that AMAT saw a sequential decline in DRAM revenue to 28% while AT THE SAME TIME REPORTING RECORD BOOKINGS. And don't tell them that LRCX saw 42% of their orders coming from the communications chip market. And don't tell them that TER numbers were chump change in DRAM representation. Because if you do tell them all this, they might start to believe yet again that we are in a multi-year chip cycle. That's what they were telling clients a few months back until they started dreaming DRAMs again.
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