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

To: Sarmad Y. Hermiz who wrote (14726)	5/2/2005 11:16:23 PM
From: C_Johnson	Read Replies (1) \| Respond to of 25522

For sure the growth rate is slowing. But so what ? Especially if my '05 profit is higher than my '04. Yeah, it's a dilemma. Profit is one thing. What if your company is valued like California real estate? (hint - start expensing options and then factor in the slowing growth rate). It is far better than the BS of analysts forecasting 60% increase, then downgrading everything because the actual increase was less. Don't twist this into something that is silly. The simple fact is that the percentage growth rate (how many times do I have to say this????) is off by more than expected. That, in and of itself, has implications for the chip business. What do you think chip companies base their planning on? Maybe, just maybe, PC growth rates???? I know three major equipment companies that believe Wall Street analyst recommendations are leading indicators of future business. In fact, for a couple it is their #1 indicator. (I can see Brian shuddering right now). I know that PC growth is positive. You know that I believe it is slowing.. Let's not beat this to death.... Sheesh..... The further fallacy in these growth rate forecasts is that nothing can grow at the projected rates indefinitely. I also know that nothing can grow like Jack's beanstalk (indefinitely). What we want from analysts is to make a considered forecast of a company's earnings and competitive position. If you read the right people you will get that. Just don't be biased - and, I will say this again, the right people have been ratcheting down valuations because "growth" is slowing. The problem with saying that next quarter will be larger than the last is that it does not relate to the price you pay for your shares or the return you should expect. Remember, we're investing here. Do you want to invest in a company with a high valuation even though you know that Q-Q the growth in their business will only be "slightly higher?" In Wall Street and conference call terms that is called, "lack of visibility." Carl