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

To: Steve Robinett who wrote (13730)	12/21/1997 6:46:00 PM
From: Big Bucks	Read Replies (3) \| Respond to of 70976

Steve and Dave, Reading both of your posts is like watching a fencing match, one thrusts and the other paries and then takes the offense. Good reparte' but I declare it a draw. You both have valid points to your argument but I feel I must side with Dave's arguement. Investment money is tight, risk investors (banks/corporations) are unwilling to invest in short/mid term Korean chip manufacturers because they are over-extended and their income is minimal or non-existent, at this time, so it is a bad investment risk in an oversupplied and weak DRAM market. Fabs have an option to upgrade existing equipment and processes to get them to the newest 0.25uM device geometries at a price cheaper than building or purchasing the newest equipment at this time. This will get them over the short to mid term technology requirements and allow them to survive, but with tighter belts and with reduced expenses. Another way is to diversify the product portfolio and produce ASICs or other foundry chips, where the market is not so soft. There is no consumer market available yet for sub 0.25uM devices so there is no real need to produce advanced products with limited short/mid term profit potential. 300mm pilot lines will take 1-2 years to become fully functional and the equipment sets required will undergo numerous productivity and enhancement upgrades. It would be a mistake to buy the newest 300mm equipment till all the bugs are worked out or the cost of improving and upgrading it to a "production worthy" status would be cost prohibitive, both from an equipment and engineering resource perspective. Will fabs upgrade? Eventually. Why will they upgrade? To improve process capability, yields, and PROFITS. Is it imperative that new fabs be built today to handle 300mm and sub 0.25uM device geometries? NO! But in 1-2 years YES. Touche', BB Oh, by the way, I have this insatiable craving for a baked potato. (Spelled with an O not oe)

To: Steve Robinett who wrote (13730)	12/21/1997 10:38:00 PM
From: Paul V.	Read Replies (1) \| Respond to of 70976

Steve, >Right now, even adjusting forslightly lower sales next year, AMAT should produce about $2/shr in '98, which makes the stock's current value anywhere from $30-$40/shr.< The unknown element based on your above EPS figure is what PE value will Wall Street and momentum players place on AMAT. At a PE of 25 we have $50, at 30 = 60, at 40 = $80, at 49.50 (last upside PE) PE we have $99. We learned this last runup to $108 ($54 post split) that trying to project Wall Street is next to impossible. Just my $.02. Paul V.