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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (9214)	10/22/1997 9:59:00 PM
From: davesd	Read Replies (1) \| Respond to of 70976

Brian, I am not an expert at AMAT, I just know about the industry a little since I have followed some other companies in the industry. Plus I did not just jump in when AMAT tanked....if you go back you will see that I was posting well before the tank (now, please don't blame me for the tank)... exchange2000.com I am a bear on the industry at this point, AMAT investment was supposed to be a quick turnaround, I bought it on a dip, unfortunately, it didn't bounce, but I expect it to go beyond my purchase price before earnings. Fortunately, it's a small position, so I don't lose sleep over it. I'm sorry that my comments rub you wrong, but what I post is my opinion, be it right or wrong. By the way the reason that I'm posting so much lately is because I am at home between jobs, on Monday I start a new job. My postings will be cut way back. dave

To: Proud_Infidel who wrote (9214)	10/23/1997 1:21:00 AM
From: Stu Bishop	Read Replies (2) \| Respond to of 70976

Brian, I am one of those who recently began lurking on this thread. I'll explain why. I can't read all the threads I'd like to, so I concentrate on those discussing stocks I am "currently" most interested in. Although I've owned AMAT 27 months, the recent price decline has attracted my attention. Sure, if the stock falls sufficiently I'll buy up some, and I have been anticipating a correction in this stock for awhile now. It's not that I dislike the stock; on the contrary, I love this company. It's because I've been expecting a correction in the stock that, when I pipe in, I can see how "my" comments might be misconstrued as bearish. Why do I expect a correction? The larger techs such as INTC, CSCO, AMAT cannot continue to grow at their past rates forever. At some point they'll run out of new customers unless they find some in deep space. So as we go forward to gradually slowing growth, investors will look more to "past growth" to justify higher P/E on "next years earnings". Say company X has prior 5 yr growth rate of 50% and prior 12 month earnings of $1. Say future growth is expected to slow to 30% and next yr estimate is for $1.35 in earnings. What is fair value of the shares? I would consider both past and future earnings, and future growth as follows. For earnings take the average: E = (1 + 1.35)/2 = $1.175. Use future growth estimate for a P/E 30. Then Price = E * P/E = $1.175 * 30 = $35.25. Say the stock is trading at $40. I would say slightly overvalued. Today, it's common to use historic growth with next year earnings estimates which would yeild Price = $1.35 * 50 = $67.5. This says the stock is grossly undervalued at current price of $40. What's fair value? It's all in how you look at it. There's enough leeway to make it look just about anyway you want. I use the first method. What P/E does AMAT deserve? I would say 25 on avarage of FY97 and FY98 earnings which is $1.73. This puts "my" fair value at $43.25. Not Bearish, JMO. Stu B