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

To: Gottfried who wrote (30035)	5/10/1999 2:32:00 PM
From: Proud_Infidel	Respond to of 70976

FWIW, Semiconductors: Why Applied Materials' First Quarter Earnings Will Top Estimates Analyst: Chris Bulkey We continue to believe that Applied Materials (NASDAQ:AMAT - news) - Quotes (Nasdaq:AMAT - news), News (Nasdaq:AMAT - news), Boards (Nasdaq:AMAT - news)) will meet or exceed first quarter earnings forecasts when earnings are released on May 18. As we noted in a story from April 26, the semiconductor capital equipment (SCE) book-to-bill ratio has shown very favorable trends with the most recent March report coming in at 1.30. In addition, CEO James Morgan recently confirmed his guidance from the beginning of the quarter saying that earnings will be in the range of $0.22 per share to $0.25. Because Applied is in its quiet period, the company cannot speak about the current quarter except to reiterate previous guidance. Comments made by Morgan regarding order flow and market share hint that the quarter is shaping up nicely. Morgan believes that the industry is entering a period of sustained recovery. You have to look no further than the book-to-bill trends and positive earnings reports from several other SCE companies, including Novellus (NASDAQ:NVLS - news) - Quotes (Nasdaq:NVLS - news), News (Nasdaq:NVLS - news), Boards (Nasdaq:NVLS - news)) and Teradyne (NYSE:TER - news) - Quotes (Nasdaq:TER - news), News (Nasdaq:TER - news), Boards (Nasdaq:TER - news)) to see that Applied's numbers should be solid. Morgan confirmed that the company continues to gain market share, as they have during past cycles. Another area that could add upside is the recovery in Asia. Applied gets about half of its revenue from Asia, and the company confirmed that bookings continue to pick-up in the region. He notes that a lot of small orders are coming from large customers, which indicates that these will likely be followed with larger orders in the second half of the year. Hambrecht & Quist analyst Eric Chen, Ph.D. believes that Applied's quarter will be 'excellent'. Chen feels confident enough to maintain his $0.30 per share estimate, which is at the high-end of Street forecasts; the consensus is $0.26 per share. Chen says several major semiconductor companies have increased their capital expenditure plans for the year confirming the company's positive outlook for Asia. As for DRAM concerns, Chen believes they are being overblown, as weak DRAM pricing has historically been a good indicator of turning points in the industry. While we think the shares could get a near-term kicker when earnings are announced, it is the long-term outlook that makes the shares especially attractive at current levels. Applied has a reputation for having the most state-of-the-art product portfolio in the industry. As chipmakers continue to transition to .18 micron technology Applied will remain a critical vendor of equipment needed to compress linewidths. Feedback suggests that Applied, once again, gained market share during last year's downturn, which sets the stage for significant upward earnings revisions, as the industry continues to improve. Applied is currently valued at 26 times fiscal 2000 consensus estimates of $2.17 per share. The key point is that forward estimates are likely to trend upward, as positive news materializes regarding order flow and continued book-to-bill improvement. Bottom Line: We reiterate that investors should use recent weakness to initiate a position. The shares will be volatile, but there is significant upside potential over the next few years. Applied closed Friday at $56.69. fnews.yahoo.com