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

To: michael97123 who wrote (37715)	10/3/2000 12:43:04 PM
From: Joseph Beltran	Read Replies (1) \| Respond to of 70976

michael, FWIW, I think a rally sparked by a "neutral" announcement would likely stick. It kind of reminds me of October 98 when we had battered tech stock prices (not unlike here) and the prospect of lower interest rates going forward... I believe the fed announces around 2:15 p.m. eastern. regards

To: michael97123 who wrote (37715)	10/3/2000 2:01:21 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 70976

Where's the bottom? The news just isn't that bad. Yes, there are multiple warnings in the PC sector. But I think the communications sector will pick up the slack. With all the money spent on new spectrum by the telcos, are they going to sit on it and do nothing? No, they will develop it, which means everyone needs new cell-phones and other devices. But, the chart is telling us something. The stock just doesn't act this way, unless the cycle is over. This "dip" has lasted too long, and gone too low. It isn't a "dip". Maybe, chips are so ubiquitous now, that the semi (and semi-equip) cycles now parallel the general economic cycle, and the stocks are anticipating a hard landing. Maybe, chips today are like the auto industry 40 years ago. I don't really see that, either (the hard landing). The Fed quit raising last May, we are now feeling the full effects of the year of raises, and the economy is still growing, if anything still too fast. Growth is so robust, there is a wide "margin for error", in the Fed's attempt to produce a soft landing. I still think the odds of a recession in 2001 are no higher than 10%. But...........you can't argue with the chart. Well, you can, but it is not profitable. Past patterns for the bottom: 1. downcycles last about 12 months. That would mean it would be prudent to wait till (very approximately) April 2001 to get back in. 2. The last 3 cycles bottomed at a P/S of between 0.9 and 2.2 Given that the company has a more dominant position in its industry, and structural changes in the semi industry (I think) favor a longterm trend toward semi-equips getting a bigger slice of the semi sales dollars, I think I need to use a higher P/S target for the bottom. So, I'll use a target P/S of 1-3 for the expected bottom. 3. Using current trailing-12M sales, a P/S of 3 equals a stock price of 30. I'd appreciate it if someone could check my math. 4. Another pattern, is that the P/S tends to decline to 1/2-2/3 of its previous peak, during downturns. A 2/3 decline in P/S this downturn, would bring us from 12 to 4, and a stock price of 40. 5. When the B2B is up for 2 consecutive months, I'll know I missed the bottom. By that time, the stock will have doubled off its lows already. 6. Anyone who follows PEs, will totally miss the turns in this industry. Look at the past patterns of PE vs. stock price. Look at how wildly 12-month forward estimates of EPS have gyrated. Forward EPS guesses are an indicator of current sentiment, and nothing else.