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

To: ratan lal who wrote (13732)	12/21/1997 8:05:00 PM
From: Steve Robinett	Respond to of 70976

Ratan, Obviously you never want to carry something for longer than its useful life. I see people in my local grocery store buying food with credit cards. They'll be paying for it long after it's eaten, not a way to get ahead in life. If you take a look at a company like ETEC systems, you'll discover a company that dominates its industry, is growing but, due to its own high capital expenditures, may never throw off much cash. Using a discounted cash flow valuation model, ETEC may never be valuable. Some fabs, as you point out, have the same problem, capital expenditures they have to carry beyond the useful life of the equipment. If they are heavily leveraged (high debt), they have an even greater problem in the current environment. The survivors--those with lower debt and probably better government connections--will upgrade their plants. Best -Steve