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

To: Edwin who wrote (22946)	8/12/1998 9:28:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 70976

Edwin, AMAT is selling at more than 60% of its high whereas some other leading Semi Equipment companies are going for 15-20% of their recent highs. Perhaps, AMAT is being given more credit than it deserves. ...or perhaps, other leading companies not enough. All in all, I wouldn't expect relative outperformance by AMAT from today's prices. JMHO, Ian.

To: Edwin who wrote (22946)	8/12/1998 9:29:00 PM
From: Henry Eichorszt	Read Replies (2) \| Respond to of 70976

Silicon Valley: Will They Still Love AMAT Tomorrow? By Marcy Burstiner Staff Reporter 8/12/98 10:11 AM ET SAN FRANCISCO -- When Applied Materials (AMAT:Nasdaq) preannounced July 10, investors were thinking the worst had come. Then came yesterday, when a conference call had some analysts feeling downright sorry for the company. In this story of good news and bad news, the good news wasn't that good and the bad news -- well, the bad news was bad. The numbers offered few surprises. But what did surprise many was that the company threw up its hands when asked when the upturn would come. It just doesn't know. For its third quarter ended July 26, Applied Materials reported operating income of $70 million, or 19 cents a share, down substantially from last year's $145 million, or 38 cents per share. The most-recent quarter's earnings came in 3 cents above the First Call consensus estimate. Good news, right? Not really, since the July preannouncement had guided expectations down from 21 cents a share. The Santa Clara, Calif.-based semiconductor equipment maker -- the world's largest -- is the bellwether for an industry that has had a terrible year across the board. In the past 12 months, as semiconductor prices have plummeted, chip makers' capital spending has gone flat. So shares of Applied Materials are down 26% from a year ago -- and closed Tuesday down another 2% at 32 7/8. One-year chart of Applied Materials vs. Photronics and the S&P 500. Min Pang, an analyst at Cowen, was most surprised by the tone of the call, which he described as downright depressing. (His firm has not participated in any recent AMAT underwriting.) According to Pang, Applied Chairman James Morgan said he could no longer predict when the upturn would come. Morgan told investors demand won't catch up to total production until the end of the year, but equipment makers have to add another six to nine months to that before it will translate to orders, Pang said. Morgan also warned that the company would have to find ways to cut costs further -- this after the company has whittled 14% from its workforce this year. Pang saw that as a sign of more layoffs to come. And finally, the company's book-to-bill ratio was 0.69, suggesting product shipments are outpacing new orders. "That's terrible," Pang said. "Over the last two-and-a-half months, business has been declining at an alarming rate." But the volume of orders -- if not their gross numbers -- cheered Brett Hodess, a NationsBanc Montgomery Securities analyst. New orders -- considered the company's most vital sign -- totaled $608 million, slightly higher than the preannounced figure of $600 million. (Montgomery has not been an underwriter for Applied Materials. Hodess has a buy rating on the company.) One money manager who does not have a stake in AMAT said the Taiwan market seemed to be improving. And she thinks the company's restructuring is a good sign. She also liked the look of the company's balance sheet. AMAT shaved 10 days off outstanding sales, which means it's doing a better job collecting money owed. And AMAT is sitting on $1.6 billion in cash, which she called "excellent." But her fund won't be buying any time soon. The manager tends to look for names that promise significant growth within three years -- and that ain't AMAT. After attending the BancAmerica Robertson Stephens Semiconductor Conference on July 29 and 30, she sold her fund's remaining semiconductor-equipment holdings except for Photronics (PLAB :Nasdaq). But she doesn't think Applied Materials stock will weaken further. For more info on institutional holders of this stock, as well as financial statements and earnings estimates, please see the Thomson Company Reports. See Also SILICON VALLEY For PMC-Sierra, Soaring Peaks and Deep Valleys 8/11/98 10 AM SILICON VALLEY Of Chips and Dips: Chewing Over 3Dfx Earnings 7/20/98 9 AM TOP STORIES Not So Chipper 7/2/98 10 AM SILICON VALLEY ARCHIVE Applied Materials Company Quotes ÿÿc 1998 TheStreet.com, All Rights Reserved. TOPÿÿ\|ÿÿABOUTÿUSÿÿ\|ÿÿCONTENTSÿÿ\|ÿÿSUBSCRIBEÿÿ\|ÿÿADVERTISEÿÿ\|ÿÿ TRADEÿONLINEÿÿ\|ÿÿFEEDBACKÿÿ\|ÿÿSEARCHÿÿ\|ÿÿHELP