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

To: Mark Duper who wrote (35260)	5/18/2000 11:16:00 AM
From: Lone Star	Respond to of 70976

Probably best that it hasn't, unless of course you need to sell off some to buy a car or whatever. With the forecast as is, the sector will show increasing revenues and profits for many quarters to come, so let the tangible results take it up methodically for he next few years.

To: Mark Duper who wrote (35260)	5/18/2000 3:36:00 PM
From: Wes	Read Replies (4) \| Respond to of 70976

You see, AMAT HAS rocketed--over the past 18 months. Right now the strength of the industry for next year has already been factored into the price of the stock. Momentum drove it up to well over $100, but now that the tech stock euphoria has disappeared, the price has come back to these levels. For the stock to move beyond its current range, we would have to see convincing news showing that the industry will be strong BEYOND the next year--maybe with 300mm. So press releases about orders being strong and chip demand being strong isn't going to do it--everybody already knows that!! (Just as during the bottom in fall 1998, news about the industry slowdown wasn't anything new) As we all know, the equipment industry is a volatile industry, so any hint that the current "strength" may not be quite as strong as previously thought would send the stock crashing. Similarly, if we see that the industry will have peaked around the end of this year (even if earnings multiples are low) would send the stock lower. It's the uncertainty about this and lack of visibility that has investors so jittery, and why the stock has a natural tendency to drift downward, and any rally attempt these days in AMAT is curtailed before the close. Once again, looking back to 1995-96, there were (as I interpret it) two major steps down. First step was brought on as the tech euphoria (which is a stock market phenomena and can sometimes have little to do with business prospects) of summer '95 subsided, and uncertainly of the future gripped the stock prices. Still, during this first phase, news of the equipment business was good, and many analysts were expecting a strong 96. During the first step down, with news still good, the forward PEs of equipment stocks looked deceptively low. But then the second step of the decline began when it started becoming apparent (through hard data) that the equipment industry was slowing and in fact declined from 95 levels. The outlook, earnings estimates, etc. all had to be quickly revised DOWN. This is how the stock prices LEAD the business trend. It's all about anticipation. So, in the Spring of 2000, we've seen a decline similar to the first step of the 95-96 decline. Consider the parallels: A tech euphoria has recently disintegrated, and uncertainty has began to burden the outlook for the equipment stocks and PEs are at reasonable levels, IF one ASSUMES strong trends continue of course. Indeed, news from the industry continues to be good FOR NOW, but this good news was already long anticipated--since the fall of 1998. Whether we see a second step of decline will depend on hard facts and data for the industry that will shed light on growth (or decline) beyond 2000 and into 2001 or even 2002. If there is another leg of growth for the industry, then the current situation is a good buying opportunity. If however, a slowdown is in the cards for 2001, then we will see a second severe decline...just as in 95/96. Right now, we're in "wait-and-see" mode. Remember: it does NOT matter that the demand, sales, earnings, etc. etc. etc. will be strong through the end of 2000. We gotta look BEYOND that!!!!!! Stock prices LEAD the business trend. Either way though, the stocks in this industry have been very rewarding over the long run, so I intend to stay put. Just some thoughts from past experience.