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

To: Gottfried who wrote (42712)	2/26/2001 3:41:47 PM
From: Alastair McIntosh	Read Replies (3) \| Respond to of 70976

I can't understand the level of bullishness about AMAT. Sales are falling. Pushouts and cancellations will probably accelerate for the next six months. In the past AMAT traded at a price/sales ratio of 1 at the bottom of its cycle. The normal price/sales ratio at the top of the cycle was 3. We are currently over 4 and thats based on trailing sales, not the $8 billion we can expect this year. We are probably looking at sales this year of about $10/share. Why can't we expect a share price that will give a PSR of 1 at the bottom of the cycle? I guess one reason would be that AMAT has a more dominant position in its marketplace. Even using a bottom PSRof 2 we will still be looking at $20/share this fall. This will still be a P/E of about 14 based on earnings of $1.40.