Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Jack Kunkle who wrote (30754)	5/31/1999 10:11:00 PM
From: shane forbes	Read Replies (1) \| Respond to of 70976

Jack: It is always always the free cash flow (and not so incidentally profits) that matters! The right eye's closed while the left eye's open thing again. No one runs a biz thinking if revs go up I am happy. If they are they are being subsidized in some way from or shape. I think what happened in 1998 is that a lot of companies upped their supply (bought equipment) for demand that stayed subdued. Oops. Thus you get thoroughly slaughtered as not only is your expensive equipment doing nothing, your old equipment is doing even less (as demand ebbed). The key is that supply increments are rarely +1% or so - they are instead + or - some much larger number. In cash flow lingo, you are making large scale (very large scale) investments hoping to sell lots and lots of tiny (very tiny scale) things. BTW note than demand can change + or - 1%. Yet if I were doing a simulation I would concentrate on the supply end since I suspect this is a more significant variable than the demand variable. AMAT is lucky - as the industry 'matures' the well-run gorillas dominate.