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

To: advocatedevil who wrote (57292)	12/12/2001 8:14:16 PM
From: NOW	Read Replies (1) \| Respond to of 70976

oh i'm certain laying off 10% of the work force is being done because prospects of increased sales and profits has never been brighter. I always trust these guys to tell us exactly what will transpire in the distant future even though they dont have a clue what will happen tommorow.

To: advocatedevil who wrote (57292)	12/12/2001 8:52:06 PM
From: Sam Citron	Read Replies (1) \| Respond to of 70976

Based on the above comment from Morgan, does "continuing downturn" indicate that demand for semi-equip is expected to increase over the near term? Here's my answer FWIW: It is easier to interpret actions than parse press releases. Morgan would not be doing these layoffs if he believed demand was going to increase over the near-term sufficiently to keep these workers on the payroll. It is clear that this move has been carefully planned as a contingency measure if demand did not improve sufficiently to warrant the headcount. And I am encouraged as an investor that AMAT has the flexibility to adapt to the highly cyclical nature of its business to control costs. When earnings are projected to be near breakeven, there is naturally more focus on lowering the breakeven point. [For extra credit: When is the last time that AMAT reported a quarterly loss and how long did they remain unprofitable?] As W would say, (make no mistake), it is Wall Street that is the piper here. Everything has leads and lags even in this increasingly just-in-time world. Morgan is betting that he can get the workers back fast enough when business turns around. In this environment, I doubt that many will be getting offers from NVLS or KLAC. It is hard to imagine that consumer demand for things electronic will be less strong next Xmas than this Xmas, considering all we have been through recently and the plethora of new applications to make our world a safer place. (ahem) It's just that next year it will be a little more avionics and teleconferencing systems and a little less butter or PCs. Then there's that DRAM glut which will be absorbed as we teach every kid in the world to do an online search before he answers a question. Database lust must replace "stranger danger" so that we can become truly competitive. In any case, just remember you can't bet against Moore's law for very long, no matter how bad capacity utilization looks. The problem for shorts here is that SCE investors seem to increasingly be demonstrating a tolerance for cyclicality and a willingness to look beyond the valley. [Compare this with the homebuilding industry (the ultimate cacoon play IMO) where even the best companies are awarded a PE of 8.5, although the industry appears to be less cyclical than it ever was. Pardon me Cary, I know the profit margins are not really comparable.] No sir. If I were doing what you are doing AD, and trading with a similar frequency and aggressiveness, I'd definitely try my hardest to get out of that bear suit and stay agnostic. I'd just follow that jagged trendline and reverse course every week or so. Otherwise you're just not maximizing profit opportunities. [Easy to say from this old armchair.] As always<g>, Sam