AMAT is a big, gangly, old man. It felt a little jiggy a few years back when it barreled down the losing path of amorphous silicon based solar. Folks are no longer so excited about advertised growth prospects. Then it went and bought a bunch of hillbillies from Montana whose best idea of a bonus was four days hunting for moose – Wall Street just doesn’t identify, no matter how good the product. Now AMAT is spending a good chunk of its cash for VSEA and adding debt for the rest in order to add a similar number of pennies per share in earnings as it loses in added debt payments. Even the VSEA CFO signaled he is getting out of Dodge as soon as the check clears, and he did this right on the conference call AMAT held to wave the victory flag.
But is AMAT wrongly slighted?
Hard to say for sure, but the upcoming call (sadly, on the other side of March options expiration) should shed light on the subject. With everybody looking the wrong way (…at VSEA…) is it possible that AMAT might surprise on the cost front? And with increased capital intensity rearing its head until ASML and CYMI get their shit in one sock, a better cost structure might give it a little boost, almost like it was young again. After all, lower cost lasts longer and makes the company stronger, especially through the down cycles.
If you want a preview of the quarter along the cost front, give some of your AMAT friends a call at the division level, see if they are acting like adults. If it sounds like someone lit a fire under their asses, there is a good chance there is pressure from above to cut costs. They may complain, but it is a good thing for the stock. Tune in later for more.
