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To: Q. who wrote (3177)	11/30/2000 2:04:07 AM
From: ELH1006	Respond to of 3661

N,first of all, I agree with you that it is unreasonable to apply a normal PE to CMOS's peak earnings or any company for that matter. I am certainly no expert at trying to arrive at absolute value ranges and this sector is one of the more difficult to place a value on due to the cyclical nature. As for averaging as you have illustrated, that is surely one one of looking at the situation; however the Asian flu impact skews the average a bit and may need to be adjusted somehow. My only point with CMOS and MTSN is that based on their respective balance sheets and present and future business outlook, they are simply cheap stocks by any measurement factor. Just my opinion. Eddie

To: Q. who wrote (3177)	12/1/2000 3:15:40 AM
From: brunn	Respond to of 3661

A P/E based on past 4 year average is no better than a P/E based on peak earnings. Why? Both are a reflection of the past. People buy based on future expectations. Obviously, people expect the E to fall but no one can say how much. If you have a short term (one year) outlook the P/E very likely will rise significantly and the stock will appear expensive. If you have a longterm outlook (years) you might actually be looking at an even lower P/E as their earnings in the next cycle might be higher than peak earnings now. CMOS's P/E of 4.5 today might become a P/E of 100 in two months and a P/E of 2 based on earnings 4 years from now. Example: AMAT had a P/E of 15 in 1996 that fell to 6 as the stock fell after peak earnings. The P/E of 6 seemed cheap but rose significantly as orders/earnings disappeared. No one valued AMAT based on the previous 4 years however. The P/E rose to the 20's and then higher as they predicted higher earnings in the next cycle. In other words, if you bought AMAT at a P/E of 6 in 1996, you would find out a year later that it was significantly more expensive based on the following year's earnings but you were buying it for a P/E of about 1 based on earnings 4 years out. For these reasons, I find the arguments favoring book value/cash as more reliable measurements to pick a bottom than P/E ratios. Even if you are not hitting the bottom if you are buying a company for close to its cash value you will probably get a good return on your investment unless the company's business will never recover. There seems to be no shortage of companies priced for failure in the semiequip industry right now.