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Technology Stocks : PairGain fundamentals

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To: Tony Harper who wrote (27)	12/11/1997 10:42:00 AM
From: Clam Clam	Read Replies (1) of 36

Growing concerns that PAIR will fall $.01 short on earnings this quarter. Both ADCT and PAIR have said Adtran is being incredibly aggressive on HDSL pricing and this is putting pressure on near-term financial results. PAIR says they are going to make the quarter but it is certainly going to be close. EPS estimates for the next five quarter go like this: $.17, .18, .20, .22, .25... for a total of $.85 in 1998. Let's say earnings do come in at $.16 this quarter, EPS estimates for next year will likely go to .17, .19, .21, .24 for a total of $.81... So the earnings risk is likely $.04 (maybe $.05) for 1998... Assuming at least 25% growth over the longer-term, this stock looks quite reasonable. 1999 is when ADSL products will kick in so there is another leg of growth out there. Pairgain looks like a takeover target now so downside looks like mid-teens (where it bottomer this summer) as momentum funds just push this stock out the door. Upside to numbers isn't apparent yet so there is no hurry to do anything but nibble on weakness.

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