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Technology Stocks : Novellus -- Ignore unavailable to you. Want to Upgrade?

To: Andy H who wrote (3306)	3/3/2002 4:08:31 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 3813

I use cycle peak earnings to value semi-equips, so I agree with your methodology. I think the problem is to adhere to a particular number like your 15 PE. The most valuable book on investing I ever read was Ken Fisher's "Super Stocks", but it took me a while to realize his PSRs were too low for the '90s. The semi-equip industry is maturing, leaders are more obvious, consolidation is occurring, and these changes are in an historically low interest rate and inflation environment. I think your analysis should consider a higher PE than 15. I have been looking at 20 - 30, up from 20 which I used in the last up cycle.

To: Andy H who wrote (3306)	3/3/2002 5:20:14 PM
From: LemurHouse	Read Replies (2) \| Respond to of 3813

<<<....you have to believe the PE should be higher and/or the max earnings will be much higher........I welcome thoughts of what NVLS can earn (and by when) in the next cycle and what an appropriate PE should be used.>>> I don't know what the PE should be, nor can I make a credible prediction on specifically what NVLS will earn and when. I doubt there is anyone that can -- particularly with so much uncertainty these days. What I am reasonably confident of, is that soon enough NVLS' earnings will be considerably higher than they are now, and that the market -- in its enthusiasm -- will assign a P/E significantly in excess of where it is now, or where it ever should be. When this happens is anybody's guess, but my humble belief is that it will probably happen within the next 18 months. I don't believe it is necessary to make precise predictions regarding earnings, P/E, or specific timing in order to make a great deal of money here. Not very sexy, and not much mathematical precision perhaps, but keeping it simple works for me. FWIW. PS: Long both NVLS and AMAT, but short near-term calls fully written against those positions.