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

To: Proud_Infidel who wrote (35180)	5/11/2000 9:30:00 AM
From: Jeffrey D	Read Replies (1) \| Respond to of 70976

Brian, From CS First Boston today. Jeff << ESTIMATE CHANGES Applied Materials (AMAT, $84.63, BUY) Target (12 Months): $112 In-Line Q2, Upside Should Materialize In 2HFY00 - Cycle Accelerating 0.13 Micron, Copper And 300 MM. Q2 Solid Revenue and EPS, Albeit In-Line with Guidance - Revenue and EPS of $2.2 billion and $0.55 (excluding charges and acquisition of ETEC) was in line with company guidance; but below our $2.25 billion and $0.58. Bookings momentum continues. 2Q bookings of $2.93 billion at top-end of range and up 20% sequentially. Book to bill of 1.34, backlog of $3.2 billion. Sequential bookings growth throughout 2000 is intact. Upside materializes in 2HFY00 - Lack of upside in 2Q driven by lingering manufacturing inefficiencies and higher R&D spending. Revenue upside to 2HFY00 with modest margin expansion provides basis for raising estimates. The Cycle is Accelerating - We are seeing an acceleration by the industry to 0.13 micron, copper, and 300 mm. AMAT is gaining share in a cycle with longevity and strength - Buy aggressively on weakness. Annual Prev. EPS EPS 10/01E $3.65 $3.35 10/00E 2.43 2.40 10/99A 0.90 --

To: Proud_Infidel who wrote (35180)	5/11/2000 9:42:00 AM
From: Jeffrey D	Read Replies (1) \| Respond to of 70976

Brian, From Chase H&Q today. Jeff << "....The balance sheet reflected an increase in cash of $314 million dollars, growing cash and cash equivalents to a substantial $3.4 billion or $3.92 per share. Net cash increases grew from the combination of vendor financing, additional paid in capital and retained profits. Receivables and inventories trended upwards on an absolute dollar amount, but DSO reduced by three days as days inventory crept up slightly to 82 days from 75 the prior quarter. To fund the increase in A/R and Inventory, the company leaned on the trade, utilized increased cash from the additional paid in capital and retained profits in the business. Debt was paid down slightly in the current period. Raising Estimates. Though the company's Q2F00 results were in-line, we feel that Applied Materials' near-term outlook is very bright. The company is realizing greater bookings, revenues and earnings than any time in its past, the market place is pleading for increased capacity and is concurrently transitioning to two new and exciting technologies in copper and 300-mm. DRAM will likely experience short supply and therefore must ramp capacity, while telecommunications applications are in almost as bad of a need for capacity. Within the next two years some 38 new fabs will be erected and Applied Materials, as the industry leader, will play a significant role in outfitting this growth. This said, we believe our previous forecasts were too conservative, and are raising estimates, accordingly. For FY00 we are raising projected revenue to $9.41 billion and EPS to $2.40, from $8.66 billion and $2.16, respectively. In addition, we are forecasting C01 revenue of $13.5 billion with a corresponding EPS of $3.68. We believe our estimates are still conservative. Valuation and recommendation. In conjunction with this report, we are publishing an industry update titled "Pedal already to the metal .", to communicate our view on the stocks in the capital equipment space. The thesis articulated in that report is, of course, highly relevant for shares of Applied. While details can be found in the aforementioned report, the conclusion is that we expect the stocks in the capital equipment space to stay in a lateral trading pattern for the next several months, while expectations are adjusted. Furthermore, given the current valuations and the robustness of the business fundamentals, we believe we are already at the mid- to- low-end of the range. We would recommend the strategy of "buying on weaknesses".