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

To: Teri Skogerboe who wrote (17866)	3/18/1998 7:45:00 PM
From: Fred Levine	Respond to of 70976

Let's rename this thread, "The Redundant Thread". good investing -- fred

To: Teri Skogerboe who wrote (17866)	3/19/1998 3:54:00 PM
From: Ian@SI	Read Replies (3) \| Respond to of 70976

Teri, Re: And most of the semi-equips are saying they have almost no visibility. Last time we encountered similar "no visibility" conditions, many of these stocks traded at ~ 1.0 times Sales. The last time AMAT traded near 1Sales was after 5 years of rapid growth; after new orders for the industry slipped back to about $0.75B; when DUV was still a gleam; when Copper processes were still far off R&D; when 300mm was an unplanned and untested next step. i.e. There was excess capacity compounded with very few technology drivers. If you expect AMAT to trade at 1Sales in the current climate, I believe that you have your head buried in the sand or some other equally dark place. ;-) Some comments by AMAT at a recent meeting with Analysts FWIW: * Applied Materials' guidance on its near-term outlook is unchanged. The company could increase its share of several markets in 1998. * The company sees strong growth in Taiwan, where it has high market share, and its prospects in Europe are good. * For the first time Applied discussed in depth its integrated strategy for copper processing, a technology which is important for 0.18 micron processing. An integrated copper processing solution. For 0.18 micron generation semiconductors, the growing consensus is that copper interconnect materials will replace the aluminum material now in popular use. The reason is that it is difficult to scale down to 0.18 microns and maintain high chip speeds without the use of copper. At the analyst meeting Applied Materials outlined a series of product solutions for copper processing, including the deposition of the required seed layer, the deposition of the primary copper layer, and the polishing of residual copper material. The importance of Applied Materials' offerings is that these tools offer a complete solution, and they are optimized to work together to provide the best results. * Applied's Lean Manufacturing initiative has reached important milestones and should further improve the gross margin over the next 3 yrs. Over time, expect major manufacturing advantages over competition to develop. Lean Manufacturing begins to pay off. Two and a half years ago Applied Materials began its Lean Manufacturing initiative as a way of developing a significant competitive edge in manufacturing (it already had a competitive edge in technology, global customer support, and marketing). The company has now begun to implement this concept (which is based on production flow techniques used at Toyota and other manufacturing companies), and the early results are encouraging. Over the next three years Applied hopes to achieve a 60% reduction in production cycle time, a 98% on-time delivery rate, better product quality, and lower materials costs. Most importantly, it intends to move toward elimination of final product test at its facilities, which would result in important savings. We think this could help increase the overall corporate gross margin to 50% or more, from a current level of about 48%. * With its heavy revenue concentration on 0.25 micron work, and on high growth foundry manufacturing, Applied Materials is positioned to outperform the industry in 1998.