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

To: Proud_Infidel who wrote (28731)	3/2/1999 6:39:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 70976

Of course, there is the charming possibility that your estimation of the PC/tech cycle is wrong. Cyclicals in the depth of a trough do trade at very high PE's -- but cyclicals at the crest of the cycle trade at single-digit PE's. I find little evidence of anything but a slowdown in recent reports by such stalwarts as COMS, MUEI, CPQ, DELL, et al. FD: I am the happy owner of a small put position on AMAT. Thus, I'm happy to entertain any evidence you have for future growth -- especially on a scale to make our hero 'woefully undervalued'.

To: Proud_Infidel who wrote (28731)	3/2/1999 7:37:00 PM
From: EACarl	Read Replies (4) \| Respond to of 70976

Brian, RE <6X sales is less expensive by far than either MSFT or INTC> True, but that wasn't my point, and that is not a valid comparison. Let's not bring other sectors into the point at hand. I am comparing AMAT to other semi-equips, and compared to other semi-equips the P/S valuation and other valuation measures is extreme. RE<And it should be noted that the 6X sales is using trough valuation measures, unfair for a company in a deeply cyclical business> I did say more than that in the original post..... "AMAT is trading at over 6 times sales, which normally 4 times sales is considered expensive. Even if sales increase by 50% (which they probably will over the next year or so) that still only puts us back to a still expensive 4 times sales". So I did give the 50% increase near term due to the cyclical nature. RE <They built up their cash position to nearly $2B while virtually every other company was losing money.> $ 1.763 Billion actually. Of course AMAT has so many shares outstanding, it is only around $4.80 per share in cash , or around 8% of current price in cash. This IS NOT impressive compared to many other companies in the sector. I'd be glad to supply a list of them, but I'm sure you already know. RE <They provide the enabling technologies that nobody else can, and hold the key to the 21st Century and beyond.>> Common Brian, you know as well as I do that AMAT has no product that is far above it's peers in any area. It is simply that they offer a "one stop shopping" approach that no one else has right now. For example NVLS is better in CVD. It's not that AMAT is better, just bigger. RE <You don't think this deserves a premium?>> Yes, I do think AMAT deserves a premium. How much is the question. 10%, 20%, 30% OK, 50% maybe, 100%-200% NO WAY. Summing up, there is no historical basis, nor is there any current basis when comparing other companies in the sector to justify AMAT price recently anywhere between $55-70, UNLESS all the estimates are wrong and 2000 brings in earnings of 4$ per share. That would be double the previous peak, and I just don't see it happening. Respectfully, Eric C.