Longs keep posting that AMAT will survive. AMAT is a leader. AMAT can weather the storm. AMAT has a lot of cash.
FINE. Probably all true. Does this mean that you hold the pig at any valuation? Its market is shrinking. Pricing is collapsing. PE of 70 at least for 2003. P/S ratio of 4+. Things are getting worse. Closing operations for 2 weeks in current quarter due to business conditions.
Well, you bring up the $64 question. How much is a leader with loads of cash and little debt worth if in the current stinko environment it makes a couple cents. Fundamentals driving this stock higher on improved business is probably at least a year or two away. So, there's $3 a share in cash. Take 40 cents a share in normalized earnings times a PE of 15 and you get $6. So you end up with $9. Its hypothetical, because earnings are basically non-existent right now and could be much better than 40 cents a share when industry conditions improve. More important is the chart, which says look for a retest of the $10 1/4 low with maximum downside around $6. Then of course we'll get another miracle rally on hope. Techs have already gone through the sharp sell downs and miracle rallies several times, but the trend has been one of lower lows and lower highs. This tendency is likely to continue until fundamentals improve, and most have already written off '03 recovery hopes.