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

To: Proud_Infidel who wrote (28742)	3/2/1999 10:59:00 PM
From: EACarl	Respond to of 70976

Brian, re <I believe it is a valid comparison. AMAT is a gorilla, a leader far and away in its sector, much the same as INTC or MSFT are in theirs.> Sure, AMAT and MSFT are the biggest in the respective areas, BUT the BIG difference that makes the comparison not valid in my opinion is that AMAT is cyclical while MSFT is not. From todays news..... " Raised Applied Materials Inc. (Nasdaq:AMAT - news) to strong buy from buy. Reiterated price target of $90 per share. Raised earnings estimates to $1.10 a share from $1.01 for fiscal 1999 and $2.17 from $1.90 for fiscal 2000." Lets all read that twice slowly.............. At a price of $90, P/E for 1999 EE = 81. AT a price of $90, P/E for 2000 EE = 41. These aren't P/E's for downcycle earnings, these are P/E's for next upcycle earnings!!!!! Just to illustrate the insanity, lets use an extreme example and say that AMAT has another ~100% earnings growth in 2001, and no more rise in price. That brings us to a P/E of 20 for 2001. Anybody out there think we'll get a four year up cycle (1999, 2000, 2001, 2002). Don't bet on it. OK, so how many times do you see AMAT sell for 20X peak cycle earnings? Yeah, I already know, the answer is never. So, what is the bet, that AMAT will take on a new valuation structure a cyclical has never seen before, and which it has never seen before? Also, how many times has AMAT gone into all time price highs while the recovery was in it's first few months? Once again, the answer is never. That's what scares me about this market, a very few very large companies get extreme valuations (of which they have never seen before), and people try to justify them as "fair". NOT a good sign. Where does one draw the line for a great company to be "fairly valued"? I know , some people do not care about P/E anymore. If it is a good company , buy it. That's another thing that scares me. But back to the point, how much is too much? a P/E of 20, 50, 75, 100, 150, 200, 500? When does even the best company get "overvalued" There has to some point where it does. Eric.

To: Proud_Infidel who wrote (28742)	3/3/1999 9:22:00 AM
From: Katherine Derbyshire	Read Replies (3) \| Respond to of 70976

>> INTC sports a market cap of ~1.5X the revenue of the entire semiconductor sector. AMAT is in a similar position of dominance in its sector so shouldn't they receive a similar premium?<< Last I checked, AMAT could not claim 90% market share in any process equipment segment, much less in the overall equipment business. INTC can. >>AMAT is the only company I know which is ready to provide a total 300mm solution. << On what basis do you make this claim? I have seen no evidence that any company is ready to provide a total 300mm solution. Katherine