Applied Materials, Inc. (AMAT)

JackLampka (73.81) Submitted: 1/01/08 7:56 PM : Start Price: $17.62 AMAT Score: -13.88

Until recently I have fooled myself that AMAT is a high growth stock and will benefit from its expansion into manufacturing solutions to the emerging solar industry. It took me unfortunately a while to realize that this is only Applied's wishful thinking, which will materialize if at all only in several years. According to the recent 10-K, Applied's revenues in the segment called Adjacent Technologies, which includes solar, were only 2% in its 2007 fiscal year. Some of the solar activities are also included in the Fab Solutions segment with about 23% of total revenues. The majority of Applied's revenues and operating income (67% and 77% respectively) comes from the Silicon segment providing manufacturing equipment used to fabricate semiconductor chips or integrated circuits.

So, if you believe your money is placed well in the semiconductor industry, AMAT is your place. However, if you are looking for higher growth from emerging industries like solar, look somewhere else. Would you own Nokia because a small portion of its business is addressing now the high growth navigation market (remember Navteq)? I wouldn't, so that's why I just sold AMAT. I may come back though in couple of years if it's solar business starts picking up.

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