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

To: Xpiderman who wrote (27747)	1/16/1999 9:25:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 70976

Xy: My proprietary service is down at the moment. I did check a baseline report dated January 8, 1998 with AMAT at 55 1/2 and it showed AMAT with a P/B of 6.1 and a P/S of 5.07. Re: "Do you think a rapidly rising sale numbers in next 4 quarter can justify the current valuation?" Yes, but the market at this price has fully discounted, IMO, a "V" shaped immediate surge in bookings. If this a no-show event, these stocks will get hammered. And it could well be a no-show event. Chip companies IMO could be very gun shy after the biggest chip recession in history. I do not see them spending themselves into oblivion until they get some more quarters of growth. They are supporting their bottom line by driving down costs short term and one of those costs is capex. We have not heard of any big orders being booked yet. They can't ignore capex forever but I think the market has discounted a typical "V" shaped recovery which could be a "U." I am short term bearish here. I don't like the chart rise in AMAT which is unprecedented IMO in such a short time period since early January without backing and filling. I don't like the overall market euphoria. I don't like the valuation of AMAT at this point in the cycle. I don't like the fact that Friday was option's expiration. And, I don't like the risk/ reward. For example, Gunnar Miller, one of the top analysts in the sector said this the other day: "Goldman Sachs chip analyst Gunnar Miller wrote in an industry review note that semiconductor equipment stocks aren't cheap but that the stocks could gain 30 percent this year. The struggling companies probably reached their bottom at the end of last year, he wrote, so "all that seems to be important for the equipment stocks now is that the revenue trend appears to be moving in the right direction." Why stay in a high risk stock with 30% upside from here over the next year given the risk is to the downside? AMAT has had an annualized return of 600% over the past three months. Sounds like the word is out in these stocks. I will book these profits given the above. I don't like to trade AMAT much as a routine matter but the market is telling me that we are in a danger zone here due primarily to the sharp rise from the October lows. AMAT is extremely vulnerable given the above IMO.