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: Jacob Snyder who wrote (63859)	5/17/2002 1:16:13 AM
From: Sam Citron	Respond to of 70976

Valuation: AMAT P/S 1-2 at the bottom; any P/S over 6 is unsustainable According to Yahoo Finance, at a price of 27.13, AMAT now has a P/S of 8.39. It is possible that this doesn't include the latest quarter, but without putting too fine a point on it, AMAT should be in SS (short sale) territory right now using your valuation metric. You would have excellent company in shorting it: John Bogle, Ken Fisher, and AD would be alongside you. Infrastructure also has expressed some dismay with AMAT's huge market cap and recently advised clients to shift some $ from AMAT to some of the smaller cap semiequip names with more leverage to the upcycle. But if 27.5 is the top, why be so conservative as to settle for a mere 5 points? 22.5 is still the upper end of the valuation band, unless sales rise markedly. Speaking of rising sales, I'm curious whether you have adjusted for deferred revenues as a result of SAB101 and calculated where that puts AMAT P/S at the present time. I think it may put it within your <6 "sustainable" band. Unless you feel that a good portion of that 51% recent jump in sequential quarterly bookings is going to be cancelled, which is unlikely IMO, this has to be one of the more dangerous shorts you could choose. Look at the trajectory of any previous AMAT upcycle and it has to send shivers through the spine of anyone brave or stupid enough to be short. Never has the flight to quality been greater in the last 30 years than today and in my view there is no higher quality tech stock. Deserves and receives a better multiple because investors know that in Morgan and Moore's Law they can trust. Want low P/S? Look at BA 0.61, COST 0.5, DPH 0.36, FLM 0.07, GLW 1.13, ITWO 1.76. None have AMAT growth prospects or profit margins, however. As inefficient as the market may be, I say it is too efficient to apply one such simple indicator as the sine qua non of valuation.

To: Jacob Snyder who wrote (63859)	5/17/2002 1:59:36 AM
From: Sam Citron	Read Replies (1) \| Respond to of 70976

OT the Bubble hasn't fully deflated Maybe the housing bubble hasn't yet deflated, but where else can you get such lovely cap gains tax breaks? Tell NT (P/S 0.54), GLW (P/S 1.13) or LU (P/S 0.89) that their valuations are still in a bubble and history will disagree with you. But that's telecom, and the reversion to mean there will be extraordinarily elastic as all that overcapacity is very gradually absorbed. AMAT wasn't in the same kind of bubble as telecom. It was not a tulip, but a rose. <g>