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

To: Cary Salsberg who wrote (36576)	8/10/2000 4:30:48 PM
From: sam	Read Replies (1) \| Respond to of 70976

So I take it you no longer believe the following: "I still like $4.50 in '02 with revenues in the $15-20B range." Message 14170471

To: Cary Salsberg who wrote (36576)	8/10/2000 5:15:06 PM
From: FiloF	Read Replies (2) \| Respond to of 70976

I do not see the same analyst reaction as you. Seems to me that many are hopping on the "sky is falling" bandwagon (or at least indicating signs of caution -- see excerpt below for an example). IMO some of these reiterations and targets are lukewarm but were made necessary by the excellent report from AMAT. Whether or not doom is on the horizon is still a matter of opinion. Contributors on this thread have helped me to analyze the situation with their insight, reporting and knowledge of the industry -- enabling me to form my own conclusion f(which I have yet to do). That seems to make it a pretty valuable thread. I am surprised you disagree. ______ bloomberg.com s=AOZL4PRYrTmFzZGFx Stock Market Update Thu, 10 Aug 2000, 4:07pm EDT Nasdaq Falls as Investors Unload Technology Shares; Gap Drops, Lilly Rises By Robert Dieterich New York, Aug. 10 (Bloomberg) -- The Nasdaq Composite Index declined, led by Cisco Systems Inc., as investors sold technology stocks in favor of drug, beverage and industrial shares. Applied Materials Inc. dropped, dragging down semiconductor-related stocks including Micron Technology Inc. and KLA-Tencor Corp. While the chip-equipment maker's third-quarter profit topped expectations, its report fueled investor concern earnings may be slowing for chip companies. ``It's time to lower expectations and invest in those companies that have a chance of meeting or beating earnings expectations,'' said Alan Skrainka, chief market strategist with Edward D. Jones & Co. in St. Louis. He said investors are buying Coca-Cola Co., Johnson & Johnson and General Electric Co. shares because their profits will grow even in a slowing economy. <snip> Chip Slide Applied Materials fell 3/8 to 71 3/4. The company said profit more than doubled to 70 cents a share in its fiscal third quarter. Its report came as semiconductor stocks have slid 24 percent in the past month on concern the tight supply of chips is loosening. ``The highest growth rate portion of the (semiconductor) cycle is clearly behind us,'' said UBS Warburg analyst Byron Walker, who repeated his ``buy'' rating on Applied Materials while saying the stock will rise to 90 over the next year, not 115, his previous target. The Philadelphia Stock Exchange Semiconductor Index dropped 1.9 percent, with Micron Technology falling 5 7/16 to 76 5/16 and KLA-Tencor sinking 3 5/8 to 42 5/8. The renewed concern about slowing earnings growth comes after stocks rose on optimism the Federal Reserve might be finished raising interest rates this year after six increases since June 1999, which have kept inflation in check and limited economic expansion. `Faustian Bargain' ``You can't have rates peak without a slowing economy and slowing profits,'' said Larry Wachtel, market analyst at Prudential Securities Inc. ``That's the Faustian bargain.'' Wachtel said that Applied Materials' profit report ``was good but not great.'' Given their high price-to-earnings ratios, semiconductor and other technology stocks need to ``blow the doors off'' with their quarterly profit reports. ``These stocks are at levels that demand stronger wine.'' Microchip Technology Inc. rose 3 7/16 to 73 1/2. The computer chipmaker said it expects second-quarter sales and profit to beat market estimates and its earlier forecasts. Microchip Technology's semiconductors are used in cars and computers, among other products.

To: Cary Salsberg who wrote (36576)	8/10/2000 6:03:37 PM
From: Jerome	Respond to of 70976

>>The answer is that faint roaring sign down river from us. We don't know how far off it is, but it is the waterfall. << This could be said of any sector. Sector......waterfall banking.... higher interest rates auto's..... foreign competition drugs.......generics chemicals...newer and better chemicals oil companies...lower crude prices technology.....better and cheaper technology The real question should be: "Which companies can navigate the river best and not swamp during water turbulence?" We have all read thousands of posts asking about entry and exit points about any given stock.Investors want to know the unknowable, based on the relationship of a few scattered data points. Better that they should read a good book. A gambler friend in Reno mentioned to me that I couldn't win if I didn't bet. Perhaps he was talking about the stock market. I was too busy inserting coins to pay attention. Regards, Jerome

To: Cary Salsberg who wrote (36576)	8/10/2000 6:06:54 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 70976

Cary, [Hmm, for some reason I can't PM you - SI broken again? I did not want to pollute AMAT thread] >If you are an expert short term trader, go for it. Here's my half-year to a year strategy. I bought KLIC recently with expectation that it will revisit the highs before falling off the cliff again. AMAT is a different story - it may fall less but it may not jump very high either. I do not agree with the cheerful "the cycle's not gonna end" concensus, but I bet from all the info that we'll see some irrational exuberance before the demise. If it does not happen before mid-year 2001, I'll try to walk away with a small loss. Take care Jurgis

To: Cary Salsberg who wrote (36576)	8/10/2000 6:08:17 PM
From: pat mudge	Read Replies (1) \| Respond to of 70976

Cary -- I appreciate all view points, positive or negative. My optimism for the semiconductor sector is based on a close following of fiber optics, in particular, and broadband technologies, in general. A few random comments from last week's optical networking conference in San Francisco: * Ciena (Steve Alexander): bandwidth demand remains insatiable. . . routers displacing SONET multiplexers. . . GE and 10GE replacing SONET in access networks. . . * Nortel: Optical networks double every 9 months; nodes double every 18 mos. . . . numbers coming out of RHK are outdated by the time we see them. . . all under-estimate market. . . investing $1.9 billion in optical networking . . . * Sycamore (Dan Smith): DWDM is just table stakes. . . 2000 and beyond, must scale the network. . . building all-optical islands. . . building technology to link islands. . . moving from 50ghz spacing to 25 ghz. . . from OC48 to OC192 to OC768. . . optical networking will be $17 billion by 2004 . . . this (optical-networking) transformation is as big as from analog to digital. . . this is a substantial wave. . . * Calient (out of group that became Siara and Cerent): optical networks will have 10X the growth of electronics. . . * Wu-Fu Chen --- "DWDM was $3.1 billion in '99, will grow to $15.2 billion in '03 --- 23% CAGR: SONET was $7.7 billion market in '99, will grow to $25 billion in '03, 34% CAGR. . . optical switching in US will be $427 million in '00 and grow to $6.4 billion in '03, 97% CAGR; optical components were $5 billion in '99 and will grow to $23 billion in '03, 46% CAGR. . . . components are 80% of systems' cost. . . network communications ICs were $350 million in '99 and will grow to $3.4 billion in '03, 87% CAGR. . . components area is key, that's where fundamental differences are. . . valuations are high b/c of scarcity. . ." * One speaker said the industry was in year-5 of a 25-year cycle; another said we're in the second inning of a 9-inning game. Choose your metaphor, the message is the same. In their recent conference calls, JDSU's Josef Straus said they were ramping production by a factor of 4 and SDLI's Don Scifres said they were ramping by a factor of 5 across all communications products, both within 12 to 18 months. Recent expansion announcements: 1) Corning --- will triple capacity: corning.com 2) Lucent --- lucent.com lucent.com 3) Nortel --- nortelnetworks.com 4) Alcatel --- alcatel.com [forecasts growth in Asia:] Singapore, June 6, 2000 - Alcatel today announced it forecasts orders in Asia Pacific to increase by more than 60% in 2000, driven by strong growth in the broadband access and optical networking markets in the region. Alcatel registered more than 100% growth in orders in Asia Pacific in the first quarter of 2000 compared to the same period in 1999. These are just random quotes and comments, and certainly the market will cause many stocks to have wild swings. That's why I like a stable company like AMAT --- one that will benefit from the burgeoning communications' market no matter which products or technologies carry the day. Looking at today's drop I'm actually hoping it continues. I've been trimming back for several weeks and have a full quiver ready and waiting. Incidentally, my largest position is SDLI and has been for a long time. I'm holding CMTO as I think the cable market will eventually take off. Pat

To: Cary Salsberg who wrote (36576)	8/10/2000 6:57:47 PM
From: Cary Chubin	Read Replies (1) \| Respond to of 70976

Cary, Thanks so much for your sensible warning of "irrational exuberance." As yet I'm undecided if this cycle is over and the current stock downturn is a warning of events to come. I do have several questions about your analysis. On July 17, 1999, in post 7992, you prepared some numbers as a framework for a discussion of "when to sell." At that time you suggested AMAT stock had historically peaked at a multiple of 20 times peak earnings. Furthermore, you published the then estimates of 1999 and 2000 earnings. By extrapolating 20% growth from the previous peak and your estimate of how long the cycle "should" last, you were able to arrive at a (split adjusted) peak of $40.585. 30% growth leads to a $60.475 peak. AMAT closed at $39 and change that day. Much has changed since then. Estimates of fiscal 2000 earnings have increased from $1.34 to $2.35. Fiscal 2001's earnings estimate, $3.38, is greater than what was posted as peak earnings ($2.03) back in July 1999. My questions are these: Does the "ratcheting up" of earnings estimates for 2001 to beyond July 1999's estimate of peak earnings, reflect over exuberance, or a strengthening and extension of the cycle? Please elaborate. What factors are you watching (other than arithmetic extrapolations) that give you confidence to predict the end of the cycle is in sight? Thanks, Cary Chubin