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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Kumar Nathan who wrote (32237)	8/23/1999 11:37:00 PM
From: A. Edwards	Respond to of 70976

SCE: Ouch! It Hurts But Its Not The End Merrill Lynch & Co. Mark F. FitzGerald, Vice President Thomas R. Diffely, Industry Analyst 23 August, 1999 Reason for Report: Out of the Fab: Weekly Industry Update Investment Highlights: · The current sell-off looks to be a typical, albeit painful, correction that could carry major stocks down 20-30% from their recent peaks. We believe the decline is due to Applied Materials de-accelerating order pattern. Investors are now worrying that the current expansion will be short lived. · We will take the other side of that bet. Chipmakers fundamentals are too strong and capacity too tight. More important other semi-equipment companies are not reporting any slowing in bookings similar to AMAT. · We believe that second half demand for semiconductors will give chipmakers the confidence to start another round of 200mm plants. For chipmakers the risk of lost market opportunities now out weighs the risk of under utilized fabs. · We think Applied Materials at $64 and Novellus at $54 are the best values in the group. The stocks trade at 24 and 19 times CY'00 earnings respectively. Foundry Report Points to Shortages The Fabless Semiconductor Industry Association just released its mid-year survey of its members, fabless semiconductor manufacturers. In the first half of 1999 the member company's wafer demand ran 105% above forecast. Revised forecast for the second half of 1999 are running 108% above the original forecast. The surge in wafer demand is creating wafer shortages at the foundry level. According several participants in the survey 0.25 micron technology is completely booked at most leading foundries. ML Analysis: Wafer shortages are building in the wafer foundry business. Most foundry companies are scrambling to meet demand by investing in new fabs, squeezing more out of existing capacity or purchasing under utilized assets in Taiwan and Japan. Cap-ex investment by foundry suppliers in 1999 will total $7.0 billion or 27% of total cap-ex. We think this will increase to $10 billion in 2000 as new fab projects at the foundries accelerate next year. Step Up In Fujitsu's Spending Last week Fujitsu announced that semiconductor cap-ex for the FY ending March 2000 would increase 40% to $800 million up from $580 million. The additional spending will be used to upgrade fabs making flash memory, telecommunications chips and ASICs for household appliances. ML Analysis: The Fujitsu announcement is another in a string of announcements over the last six months from chipmakers where cap-ex budgets were increased. As It is our view that this ratio is a lagging indicator and simply reflects the recent orders and revenues that have already been reported by many companies. The ratio does not include shipment and orders of foreign equipment companies. We believe the US ratio continues to be higher than the global ratio since the recovery is weaker in Japan than the US.

To: Kumar Nathan who wrote (32237)	8/24/1999 12:26:00 AM
From: Gottfried	Read Replies (1) \| Respond to of 70976

Kumar, just for laughs look at these reiterations posted here Friday, Oct 17 1997 9:04AM ET siliconinvestor.com The stock closed at $41+ that day. It's low would be around 22 eventually. Actual earnings for FY'97 were $1.32 and $0.76 for FY'98. A comparison to the analysts' estimates especially for FY'98 may be of interest. Respond to Post # 8731 of 32245 Lone Star, Sonki, Thread, from todays Zacks: AMAT: PAINE WEBBER has reiterated estimate for fiscal year ending 10/97 of $1.35 on 10/14/97 AMAT: PAINE WEBBER has reiterated estimate for fiscal year ending 10/98 of $2.15 on 10/14/97 AMAT: PAINE WEBBER has reiterated estimate for quarter ending 01/98 of $0.49 on 10/14/97 AMAT: PAINE WEBBER has reiterated estimate for quarter ending 04/98 of $0.52 on 10/14/97 AMAT: PAINE WEBBER has reiterated estimate for quarter ending 07/98 of $0.56 on 10/14/97 AMAT: PAINE WEBBER has reiterated estimate for quarter ending 10/97 of $0.45 on 10/14/97 AMAT: ROGERS CAPITAL made new estimate for fiscal year ending 10/97 of $1.32 on 10/03/97 AMAT: ROGERS CAPITAL made new estimate for fiscal year ending 10/98 of $2.10 on 10/03/97