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

To: Cary Salsberg who wrote (36603)	8/10/2000 9:21:06 PM
From: Joseph Beltran	Read Replies (1) \| Respond to of 70976

If investors -especially institutional ones- have bought the argument that the cycle end is near, it seems to follow that the entire sector will be deemed "dead money" for a long time to come, regardless of how excellent or optimistic future earnings reports and forecasts from ceos' are. 3 months from now AMAT will report great earnings and a great forecast and analysts will respond: "So what, now we are 3 months closer to the end of the cycle". The following quarter analysts will say the same thing until we eventually reach a quarter (perhaps 2 years from now) when earnings and forecasts are not as "rosy" and then analysts will add: "We told you the cycle was going to end". As far as I can tell, in the present environment, there is little that the industry as a whole can do to plausibly "prove" that the cycle is indeed not over by a long shot. It's the proverbial situation where you are confronted with disproving a negative. All the bears have to do is to periodically reiterate their claim and the best we can hope for is for the sector to thread water for a prolonged period of time. Of course, without this sector to invest in, I guess people can put their money into such growth engines as coca cola, mc donalds, and clorox.

To: Cary Salsberg who wrote (36603)	8/10/2000 10:02:21 PM
From: Ian@SI	Read Replies (3) \| Respond to of 70976

Cary, Past cycle Peak P/Es were achieved when the market P/E ranged from about 6 to 15; inflation rates were generally much higher; and the fed was less friendly. Is it reasonable to stick with a 20 P/E when the market P/E is closer to 30 than 13? Also on a $11B Revenue run rate, AMAT's run rate for E is $2.80. Morgan expects to better a $20B company before this cycle is done. Wouldn't you expect higher margins? and a Peak E above $6? Or do you doubt the $20B Peak revenue? i.e. AMAT would have to capture 25% of global chip equipment revenues if 25% of a $325B global billing for chips. Somehow, I don't think we've come anywhere close to this cycle's peak prices. Just a few thoughts, Ian.

To: Cary Salsberg who wrote (36603)	8/17/2000 11:48:05 AM
From: Ian@SI	Read Replies (3) \| Respond to of 70976

Cary, Now that AnalCysts, institutions and fund managers have resumed their exuberance for equipment stocks, are you still upset with this thread's optimists for influencing your hold decision? Your comment makes me think that you're a closet day trader. :-) How big a step is it from attempting to perfectly time intra-year cycles to intra-quarter and ultimately day trading? I'd be happy to sell a little early once; just prior to the inevitable capacity overbuild. And I'm becoming less confident that the overbuild is inevitable. Larger fabs are being added by fewer players. But these larger fabs are a smaller percentage of the total base. And as the chip market grows, that will become increasingly true. Thus, an oversupply of 20,000 wafers / month would not be as devastating nor last as long as was the case a decade ago. In short, I expect that we'll see a dampening of the cycles. Yes there will still be cycles, but it's quite possible they won't be anywhere near as severe as was the case. FWIW, Ian. At that time, tax considerations and irrational exhuberance on these threads and the lack of support of my plan, kept me in the 30%.