Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Katherine Derbyshire who wrote (45695)	4/20/2001 11:58:25 PM
From: brunn	Respond to of 70976

Re Over the last several years, AMAT has not only gained market share vs. other equipment companies If AMAT is gaining on its competitors, it hasn't been appreciated by the market over the last couple years as these graphs show: finance.yahoo.com finance.yahoo.com I feel that what I said about AMAT is true about the sector as a whole--semiequip business is bottoming with valuations atleast double previous cycle lows--NVLS, BRKS, KLAC all would be in the 20's rather than 40-50's if they were valued as they were in the fall of 1998. Therefore, your argument that AMAT's valuation has increased secondary to its greater market share does not make sense to me. You need arguments that apply to the entire sector rather than AMAT in particular (e.g. the 3 conjectures in my previous post.) Now I agree that things change and that history does not necessarily repeat itself. However as investors, history is the best guide that we have and we should either expect patterns to repeat themselves or else try to understand why things are different now than before. I think it may actually be this obsession with the past (people remembering 500-1000% gains from previous lows) that are helping to propel AMAT now and will dampen its rise going forward.

To: Katherine Derbyshire who wrote (45695)	4/21/2001 1:17:31 AM
From: XBrit	Respond to of 70976

That's an interesting thought, Katherine. One could certainly argue that AMAT is selling a more knowledge-intensive (higher-value) product over time. And it certainly seems AMAT doesn't want to fall to previous trough valuations of 1-2 times sales. However, many other long-established tech stocks (like INTC, MSFT) seem to have similar historically-high valuations also. So I still suspect that residual bubble characteristics in the Nasdaq are the biggest reason why price/sales remains so high.

To: Katherine Derbyshire who wrote (45695)	4/21/2001 12:26:17 PM
From: michael97123	Respond to of 70976

" I don't have an opinion on whether AMAT is fairly valued at these levels or not. But if it were my money I would be very cautious about using 1995 and 1997 valuations as an indicator." Well said! The lesson of history should be that one should not ignore history, not that history repeats itself because it doesnt. The knowledge of what went before, in and of itelf, prevents identical repetition. If Amat's low holds above what history would have suggested it should go to, it is because history also tells us a ten bagger is in the offing. Now of course by not going to the old low valuations--lets say 15-20, a ten bagger with the stock at 60 becomes a 2-3 bagger, not chump change at all. If that is the case here, those that are waiting for those lower numbers or numbers closer to them(prior low for the year) may never see them. Mike