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

To: Jacob Snyder who wrote (38507)	10/19/2000 7:01:49 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 70976

Jacob, I don't think we are headed for a hard landing. The problem we faced was too rapid economic growth and a stock market bubble. The rate increases, the oil price increases, and the bear market will bring the rate of growth down to sustainable levels. I don't see any rate decreases because of the inflation caused by energy prices which will move through all economic sectors. I think your soft landing scenario is too rosy. When capacity additions are in $2-3B chunks and the lead time to full production is 3 years, there will be under/over capacity. I don't believe that "semi companies have learned to anticipate demand better" to a degree that will affect cycles. I don't think that chips are in any "defensive" industry products to a significant degree. Therefore a decline in one chip consuming sector is likely to be joined by most others. I am not talking about normal short term lumpiness in distribution channels which results in one or two quarter flattening of sales. I think $150 is a pipe dream. I hope unrealistic greed does not deter sales in the $75-90 range, if we are lucky enough to get there. I think $15 is a possibility for the next cycle low, but it is not likely for next year unless a major recession like the SEA crisis hits. Barring economic calamity, 2001 and 2002 will show increasing sales and earnings with decreasing growth rates. The falling growth rates and the expectation of the down cycle will keep PEs much lower than some of us have become accustomed to.