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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (6645)	11/3/2002 11:26:02 AM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 95525

>> If you wish to criticize my outlook it can be found here: How about discuss, instead of criticize. Taking AMAT's sales, and estimating EPS from that. I've selectively re-arranged your data. Sales are AMAT's in $billions. EPS is AMAT's in $. Year , Sales , EPS ---- , ----- , --- 1999 , 5.09 , 0.44 2000 , 9.56 , 1.20 2001 , 7.34 , 0.59 2002 , 5.10 , 0.18 est. 2003 , 5.60 , 0.35 est. 2004 , 6.90 , 0.55 est. It seems you are assuming that approx $7B of sales will result in $0.55/sh net profit. I think that underestimates the earnings. The reason that $7.34 B is sales generated only $0.59 in EPS (in 2001) is that the company was staffed for $9B sales level. And they had not yet made reductions. So a plausible (optimistic) estimate of EPS in 2004 is $0.80, if optimal staffing and cost controls are in place. Sarmad

To: Alastair McIntosh who wrote (6645)	11/3/2002 12:08:22 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 95525

I appreciate your analysis. Well conceived and presented. I checked Yahoo for current shares outstanding and got 1.65B. $7B divided by 1.65B = $4.24 revenues/share. A 20% after tax profit margin gives a EPS of $0.85. A 20 PE and a PEG of 1 are pretty conservative for an industry leader with a 20% annual growth rate in this low interest rate environment. If one believes that AMAT will go from $7B in 2004 to $20B in 2007-8, then one is willing to pay higher prices. A 30 PE and a PEG of 1.5 on $0.85 gives a price of $25.50 in 2004 and a move to $20B sales gives a price of ~$73 (in my ballpark $55 to $83 in 2006). My buy range for AMAT since the beginning of 2001 has been $12.50 - $20.00. I think we are just stating both optimistic and conservative valuations. I think we have established a good "ballpark" which investors can adapt to their individual temperament.