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

To: Zeev Hed who wrote (54109)	10/13/2001 1:59:53 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

Zeev: re semiequip peak and trough P/B: I agree completely that the 2000 peak valuations (not just P/B, but P/CF, P/S, etc.) need to be thrown out as "outlying data points, at the extreme end of the bell-shaped curve." That was a once-or-twice-a-century event. But, I think it is very useful to compare valuations (P/B, and P/S , not PE, for these cyclicals) between now and previous troughs. And those comparisons indicate we may (just may) be somewhere in the vicinity of a bottom. That we are done with the sudden 50% drops in market caps (market caps that, until very recently, were composed mostly of air and dreams). And, when those comparisons are made, current prices are, finally, not looking so absurd. You point out, correctly, that balance sheets are in better shape now for the semi-equips, compared to 1998. The strong have become fortresses, and the weak are now strong. During the Bubble, the semiequips raked in cash. Especially AMAT. Within "book value", the proportion of cash (the best variety of "book") is up. AMAT, for instance, has $5.48/share in cash and equivalents, which is $4.7B, as of 7/01. It almost makes me wish for a return of 1996 trough valuations (P/S = 1 for AMAT), as this would allow me to load up on 2005 LEAPs, and allow the company to pick up a few niche players at distress prices.