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

To: Math Junkie who wrote (27958)	2/1/1999 9:49:00 PM
From: Henry Eichorszt	Respond to of 70976

From thestreet- A Cap for the Cap Equipment Stocks? In September, when chip-equipment makers last came to a NationsBanc Montgomery investment conference, the interest among money managers was slight. Those who attended chip-equipment sessions were wondering when stocks like bellwether Applied Materials (AMAT:Nasdaq) would ever see a lift. Six months later, the rooms are packed and attendees are wondering when the stocks will top off. AMAT, which was trading around 24 in September, closed at 62 1/8 on Monday. "Right now we think they might be ahead of themselves," said Bryan Agbabian, a fund manager with Brookhaven Capital Management, a contrarian fund that stayed out of the recent cap equipment stock frenzy. "Getting in right now...." Agbabian shook his head. Montgomery analyst Brett Hodess, who was the first analyst to call the cap equipment bottom, said investors shouldn't sell yet -- at least not the industry leaders. The chip industry is gearing up for a revolution in materials, which will stretch out the equipment sector's historical two-year up-cycle to three years. "You will see some interesting new technologies coming into play," he said. Strong bets, according to Hodess: Leaders AMAT and Novellus (NVLS :Nasdaq) and some value plays such as Speedfam (SFAM:Nasdaq). -- Marcy Burstiner

To: Math Junkie who wrote (27958)	2/1/1999 10:00:00 PM
From: Georgeb	Respond to of 70976

Richard, I believe that you are right to predict the next quarter's revenues using a ratio of the SEMI bookings and the NEXT quarters revenues. It would not make sense to compare current revenues with current bookings, and there is no reason to assume that a causal relation exists in that case. Your $550M seems very reasonable. The semi industry will have a good year according to our government: about 10.2% growth (about $4440M for ‘99 AMAT revenues). The capital equipment industry however is predicted to underperform semi. To ramp to that we can try some silly numbers proportionate with projected quarterly earnings (from AMAT's web page): 1Q=$550M, 2Q=$710M, 3Q=$1243M, 4Q=$1954M (total for year=$4440M) “Hodess predicted the semiconductor capital equipment industry will fall 5 percent in 1999 but grow 25 percent to 30 percent in 2000 and 40 percent in 2001.” In English, does that that mean that everyone holding AMAT now is looking at earnings in 2001, a full 2 years from now? Since when did our "instant-gratification" civilization make stock valuation such a far-sighted effort? Tell me this is just a huge bubble, and the daytraders will get tired soon, and move on to another sector (Forbes has an interesting article this month about the current trader favorites).