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

To: Teri Skogerboe who wrote (14997)	1/23/1998 3:38:00 PM
From: 16yearcycle	Read Replies (2) \| Respond to of 70976

Teri, The dow e around 420 in '97, for a trailing pe of 18.3. If e are flat this year, currently projected at 465-470, what can the downside be with rates so low? Dow 7000 is a pe of 16.6. Dow 6500 is a pe of 15.4. At the same time, is a pe of 20, with falling e, and rates so low, out of line? Coming out of down earings in last recessions, pe's go up anticipating growing e. So perhaps things should adjust down now, but later this year when e accelerate, pe's should go up. A dow 9240 at this time next year is not out of line.( 420 x 22 ) My take on the Dauvin quote is that he thinks that the undercapacity may occur this year, and then may continue into 1999-2000.

To: Teri Skogerboe who wrote (14997)	1/23/1998 11:37:00 PM
From: Big Bucks	Respond to of 70976

Teri, There is no doubt about it, we are in a downturn for at least 6 months and possibly longer, your B-B numbers indicate this well. Yes a lot of equipment was sold over the last year to address the 0.25uM ramp up and will improve productivity once it is in full production. Not all fabs are in a full production mode since they have to continue to make money with their existing equipment sets as they transition to 0.25uM, and as the yields/productivity increase to high enough levels the older equipment will likely need to be updated or replaced once there is a large enough consumer/customer market for the new products. to the best of my knowledge these new products are not readily available in the distribution channels but should be by the Fall time frame. Once the new 0.25uM chips become the latest innovation "standard" the price/margins on the "older" 0.35uM+ chips should start to drop as chip customers lose interest in them and try to bring "newer/better" technology products to the market . This can give them a competitive edge using the newer technology. Once the momentum starts with the new chips it will force fabs wishing to compete in the market to purchase or upgrade their fab/equipment in order to get manufacturing contracts with large customers. I think the article you posted by Dauphin has some significant merit and 2nd half of '98 will start the hard push between chip companies to invest in the newest equipment if they haven't done so already. Just my opinion, BB