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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (14199)	4/12/2005 1:44:30 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

The Coming Chip Revolution Facing the limits of silicon, scientists are turning to carbon nanotubes yahoo.businessweek.com

To: Gottfried who wrote (14199)	4/12/2005 2:19:44 PM
From: Proud_Infidel	Respond to of 25522

Is Applied Materials a Buy? Tuesday April 12, 12:52 pm ET By Dan Bloom Last year was a great year for Applied Materials (Nasdaq: AMAT - News), but it wasn't so great for the firm's investors. Applied Materials is the world's largest supplier of the equipment that is used to build semiconductors, and you can be sure that most large companies that manufacture semiconductors, like Intel (Nasdaq: INTC - News) and Texas Instruments (NYSE: TXN - News), have Applied Materials' equipment in their facilities. Even though sales rebounded strongly in 2004 to a hair over $8 billion from just under $4.5 billion in 2003, the stock price fell by over 30% over the last year. Why the price drop? Semiconductor investors tend to be nervous types: They spent most of 2004 fretting over an inventory buildup at the semiconductor manufacturers and figured that a slowdown would hurt capital spending in 2005. Applied Materials' first-quarter results showed that this was a valid concern. Sales were down to about $1.8 billion from $2.2 billion in the fourth quarter, and earnings fell 37% to $289 million. So, with a share price below 17, a cyclically depressed price-to-earnings ratio of about 16, and uncertainty regarding the timing of the upturn, is the stock a good buy now? I believe that this is a good opportunity for several reasons. (1) Applied Materials is very strong financially. It has a great balance sheet with a net cash position (cash minus debt) of almost $6 billion. It won't go out of business if the downturn is deeper than expected. (2) The semiconductor industry transition from 200-millimeter silicon wafers to 300 mm wafers should help ease the downturn for equipment makers. A 300 mm wafer has more than double the surface area of a 200 mm wafer, meaning many more chips can be built on the larger wafer, which lowers overall costs. (3) Applied Materials has a much stronger moat than do most technology companies. Here's why. If your employer was spending $2 billion to build a new semiconductor fabrication facility and you were in charge of spending tens of millions on some big machines that are going to be at the center of the action, would you buy them from some upstart, like say, Uncle Fester's Pawn and Semiconductor? Of course not. You'd go to Applied Materials, a company that has proven it knows how to design, build, install, and service equipment that you are going to depend on 24 hours a day. A few shares of Applied Materials would be a fine addition to many diversified portfolios. While the shares aren't quite in the bargain bin, this is probably because investors understand that the future of semiconductors definitely includes Applied Materials. For more material on this company, applied or otherwise, check out its discussion board, only on The Motley Fool. Fool contributor Dan Bloom does not own shares of any company mentioned in this article.