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

To: Gottfried who wrote (40056)	11/28/2000 12:30:18 PM
From: michael97123	Respond to of 70976

You are right. I just was talking generally. If someone is waiting for 30 and it gets there that's great for them. With todays action we might be there sooner rather than later and I guess that would be a good thing if it meant a bottom was reached. Good luck to all.

To: Gottfried who wrote (40056)	11/28/2000 5:06:24 PM
From: brunn	Read Replies (3) \| Respond to of 70976

Regarding the 28 bottom speculation: I did the following math: AMAT's peak earnings in this cycle (.77 eps) divided by AMAT's peak in previous cycle (.30) multiplied by previous bottom (11) gives us 28. In other words, if you assume the worst case scenario that we peaked last quarter and are headed for a semiconductor recession similar to the Asian Crisis semiconductor recession in 1998 a stock price of 28 would be the same valuation relative to earnings peak as a price of 11 was in 1998. I feel that if this cycle is over it is doubtful that things could get worse than they were in 1998 when half of AMAT's customers were mired in financial crisis. Of course things might never get as bad as they were in 1998 and even if they do, AMAT's or the stock market's valuation may be different. For example, in 1998 I was looking for 5.5 as a possible bottom, based on the assumption that it would reach 1996 levels (if anything, things in 1998 looked worse than they did in 1996.) AMAT never fell below 11, probably rightfully so as they came out of that recession stronger than their competitors. I made the mistake of buying some of these competitors that appeared cheaper only to find out that they were cheaper for a reason. On the negative side, we might be hurt by a valuation correction in the overall stock market. Interest rates were lower in 1998 than now and this helped support stock prices (the lower the interest rates the higher the P/E in general). I guess Greenspan may help us with this in the next few months. I did a similar calculation as above with several semi-equip stocks. Only TER, KLIC, and BRKS had fallen to 1998 levels relative to earnings peaks. TER and KLIC have had significant earnings warnings and therefore their greater correction seems warranted. TER bounced off this level (23) and KLIC is actually below it. BRKS looks like a steal, having fallen further in 2000 than it did in 1998 relative to earnings peaks and trading below book value (27 vs. 24), and has over $14 in share in cash and no debt--if you subtract the cash from the share price, it sells at a P/E of 3 on next year's earnings (5.6 on trailing earnings.) Or is it cheap for a reason I am not aware of yet?