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

To: Justa Werkenstiff who wrote (21071)	7/2/1998 4:33:00 PM
From: Investor2	Respond to of 70976

RE: "EPS should grow 25%-plus annually over the next five years. We project cyclical peak revenues and EPS at $10 billion and $7.00, respectively." Interesting. I guess that means that Lehman sees a price of more than $140 within the next five years. Best wishes, I2

To: Justa Werkenstiff who wrote (21071)	7/3/1998 1:13:00 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

re: Lehman's pitch, and other thoughts: 1. no attempt at timing: they don't guess when they think the upturn will happen (which quarter of 1999), or when the next cycle will peak. 2. interesting that they say EPS will be 7$ at next cycle peak. They're either expecting a long cycle, or a doubling of EPS for several years (1.25 in 98, 2.50 in 99?, 5.00 in 2000?, and reach 7.00/share EPS rate during 2001?). So, are they saying sell when revenues reach 10B$? 3. AMAT (stock and company) are holding up better than the others. And the more brutal this double downturn is, the better position AMAT will be in, relative to it's competitors, when the upturn happens. 4. They're probably right about the sharp upward move once we breach the 40 barrier, and all the momentum guessers pile on. Of course, that will be a level 1/3 above today's price, which may not be the bottom. 5. I think the Mid-May step down shook the last momentum guesser out of the stock. Value investors started to buy at 32, and supported the stock heavily at 26-28. We'll see how long support lasts. Lehman thinks it'll hold. I'd like to see another run to the 32 or 35 level, and then another test of 26, in the fall. I'd like to see if the Japanese mean what they say about restructuring, and the Chinese mean what they say about not devaluing, and the Koreans take out DRAM capacity in the face of Micron's challenge, and Intel stop it's revenue slide. 6. I see 3-6 more months of bad news in front of us. More of the things on my "bottom indicators" list are starting to happen: (consolidation in semis and semi-equips, capacity being taken out, a more realistic appraisal of the stocks by the market =lower prices and a later upturn date). 7. However, the most important thing is that massive overcapacity still exists. Intel's plant closings is proof of overcapacity in CPUs, now matter what anyone says about allocation. DRAM may stay in overcapacity till Micron spends its last dollar at the end of 1999, or is the only company on the planet left making DRAMs (thier plan is to make one or the other happen). DRAM companies are looking at the yummy margins in other areas, crashing the party, and making everyone else feel their pain.

To: Justa Werkenstiff who wrote (21071)	7/3/1998 5:54:00 PM
From: Proud_Infidel	Read Replies (3) \| Respond to of 70976

Justa, Re:We project cyclical peak revenues and EPS at $10 billion and $7.00, respectively. The company is implementing an early-retirement program to reduce its work force by 5% (thereby lowering its cost structure) while retaining key personnel for the upturn. I assume they mean $7 post split; I have never seen projections this high. Not that I'm complaining. If they can meet $7 and there is euphoria on the Street for the group, we are looking at $200+ easy. My cyclic high projection high was in the area of $5. Using their projections, I come up with a Net Income of about 26.95%(385,000,000 X 7/10,000,000,000). Personally, I believe this assumption is a bit high. I would rather use an assumption in the 15%-17% range and see them beat it and watch as the Street declares AMAT the next MSFT<GGG>. What is your take? Brian