The Tax rate for FY98 is 26%. So, EPS = $1.70.
However, the shares used for EPS calculation will be increase as the stock price goes up, due to the options outstanding. Does anyone know the number of options outstanding and their respective strike prices ?
I believe Ed's forecast is very conservative. Given the recent history of disappointments, it is best for him to position the company in this way with Wall Street, and then to raise estimates later in the year, so he regains credibility. The analysts will play along as they do not wish to be burned again either. A few months from now, they will be raising estimates repeatedly.
(My estimate is 20%+ revenue growth, 11-12% operating margin, and EPS around $2.00, with share count higher than FY97.)
At that point, I expect the analysts to be wildly bullish, and the stock will be at $60. If you are skeptical, look at the history of all the other "good" tech stocks that got hit, due to product transitions or other reasons, and then turned around and chalked up tremendous gains in share price. |
