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

To: Return to Sender who wrote (7898)	12/29/2002 12:10:09 PM
From: Kirk ©	Read Replies (1) \| Respond to of 95526

Past cycle bottoms came when most thought the PC was dead because a 60 Mhz Pentium did all you needed, that nobody needed an upgrade to Windows 3.1, that Asia would collapse back into the stoneage, etc. Now people are talking about "when the capacity is used up by cell phones that send pictures or cars with GPS so guys don't get yelled at for being lost" then they will be profitable again. Different mind set. Probably a different set of bottom parameters. Thus good reason to scale in and out where you are comfortable for the long term. Kirk

To: Return to Sender who wrote (7898)	12/29/2002 8:46:41 PM
From: Cary Salsberg	Read Replies (2) \| Respond to of 95526

RE: "Your contention that when AMAT earns as much as $1.20 a share again that a stock price peak of $24 to $36 is too low is probably accurate." If AMAT earns $1.20 at the peak, then a peak of $24 to $36 is reasonable. I think $1.20 is too low because I believe AMAT will exceed 2000 revenues. RE: "I get an AMAT P/S Trough Valuation of $4.80 based on a median semiconductor industry P/S of 1.9 at trough bottoms." I don't think P/S is a very good measure for semi-equips during a down cycle because sales are falling, the bottom for sales is uncertain, and the time frame and rate for a sales recovery is uncertain. These are similar to the reasons PEs are not very useful. I have found that price/book is a better measure because it is relatively constant during the down cycle. RE: "Now maybe it is not likely that AMAT will fall back to 5 year lows especially if the btb has hit a low and is ready to rise back above 1.00. But for the sake of argument lets say that will not happen and instead the btb bounces along bottom making investors wonder if these stocks are not still valued too richly." I think it is a mistake to consider the BTB, a ratio, without looking at the levels of the two components. Both bookings and billings are higher than the trough in 2001. If bookings rise from here, it will not matter what BTB is, AMAT will have bottomed.