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

To: Proud_Infidel who wrote (36589)	8/10/2000 7:09:55 PM
From: William Griffin	Read Replies (2) \| Respond to of 70976

Seems as if today's debacle was triggered more by macro-economic concerns rather than the semi cycle debate. Dell's report could cause the same tomorrow, despite their prediction of continued strong (30%) growth in the second half. Several analysts asked about second half earnings during the AMAT conference call. All evidence points to a strong 2001. As mentioned in the WSJ article, everyone's looking for a "soft landing" What stat or stats will signal this? or will Allan G just tell us later this month?? Thanks.

To: Proud_Infidel who wrote (36589)	8/10/2000 9:27:07 PM
From: mitch-c	Read Replies (2) \| Respond to of 70976

Brian, I figure that the (current) three technology shifts in chipmaking are combining with expansion in the three markets you discussed. Either alone would give smooth growth; together, they peg the meter. Chip demand is ramping faster than the equipment companies can punch out machines to make the chips. ALL of the recent information from those companies - even the disastrous KLIC conference - points to such a bottleneck. The previous cycles have seen demand covered much faster than is now possible, given current orders and backlogs. A B-to-B of 1.20 STILL means that AMAT is taking more new orders than it can fill, and the backlog is growing. Instead of a quick peak-and-drop, as the wisdom seems to be among the herd of analysts, I see more sustained demand at max-achievable production. Morgan's guidance is right in line with that. Effectively, that means that you bulldoze the top of the peak into the valley beyond, giving the current boom a longer flat-topped mesa pattern. That said, Cary is correct - the easy money is gone, and a lot of pickers of low-hanging fruit have gone with it. IIRC, he's comparing the $22 low from four years and two splits ago with now. We saw another $20-something low about two years and one split ago. Figuring splits, that's $5.50 and $10+ respectively. $10 to $70? No, we probably won't see another 7x price increase in this cycle (although I'd love to be wrong). That would give AMAT nearly a $500 value, which I think everyone would agree is unrealistic. However, I think Cary's faint rushing noise is coming from the dam that broke behind more than the waterfall in front. AMAT has a great flood of demand to push it forward as fast as it can paddle ... until it does, in fact, reach the falls. $500 before then? No. $200 in two years? Very likely. $40 after that (extrapolating the pattern of splits and lows)? Yep, I'll believe that, too - but not much before then. Should you settle for only a possible 3x increase at the risk of a 40% drop from here? Your call -- and that's what makes a market. One person's opportunity is another's "risky silicon scheme." That's the difference of opinion here -- where Cary sees all valley, most of the rest of us see more mountain before the next cliff. I don't think anyone is alleging that "cycles are over," just that this one is stronger and most analysts are gunshy. Remember that what turned out to be "easy money" didn't look like it at the best buy time, either. - Mitch (metaphor mixer extraordinaire)