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

To: Proud_Infidel who wrote (13759)	12/22/1997 8:59:00 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 70976

traders placing bullish option bets on AMAT: newsalert.com.

To: Proud_Infidel who wrote (13759)	12/22/1997 2:17:00 PM
From: davesd	Read Replies (2) \| Respond to of 70976

Brian, I talked to three semi companies in the last few days, one was AMAT. The other two (MTSN, PRIA) said that they are seeing softness in general in the market, only a month or two ago they didn't expect any changes in business...that's changing now. AMAT IR person gave me a standard line that followed the comments made during the conf call....no pushouts from asia yet and still shooting for 51c for the quarter and $2.10 for the year. I did not sense too much confidence in her comments...she was basically reading a script. I still think we will be getting a warning before earnings on the 9th. Some of you think I am forecasting the end of this industry....not at all...I am just trying to figure out when we will hit bottom so that I can add to my current position and stop hedging it. AMAT will survive any downturn as many other companies will....like buck...I'm just trying to gauge the bottom. dave

To: Proud_Infidel who wrote (13759)	12/23/1997 9:22:00 PM
From: Bura	Read Replies (1) \| Respond to of 70976

Brian, I agree with your assessment entirely. However, let's take a $1.40 EPS for FY98 (even though I agree that $2.08 to $2.15 was conservative). Even at those reduced earnings, AMAT is a steal. At $28, this would give AMAT a PE of 20. The S & P trades at the same multiple. And this would be a 20 PE on depressed earnings. Therefore, if AMAT were to recover in FY99 when most of the Asian situation were resolved (to some extent) and post EPS of $2 to $2.50 with a sustainable growth rate of 25% to $30, we could still see a new high at 55 (as the PE would still be under 25(55/2.25=24). Let's also remember that we are very early in the semiconductor cycle. They usually last at least 3 (and often up to 5) years. The previous cycle ended badly in 1996. That means that we are only in the first of many good years ahead. Coupled with the fact that 1997 was still a slow year overall, and that 1998 could be slowed by the Asian flu, this cycle could easily last until 2001 or 2002. That means that this current fire sale of AMAT will probably look silly in a year or two.