OT-FO: Keith, Good post, and I like your logic. Regarding JDSU looking like good value here, I wish I was better able to evaluate this. I think the fiber optic industry is hard to value, because this is the first "bandwidth cycle" we have been through. The forecasts for how long this cycle lasts are all over the place. I wouldn't take the book value valuation of JDSU very seriously. Stocks in real distress can sometimes go down to or below cash value even. Having said that, JDSU looks cheap to me based on P/S and the PEG ratio, if one can believe that FO will be a big growth area again in a year or two, which I think it will. However analysts forecast a significant decline in earnings in 2002, for whatever that is worth.
One reason why I have been trying to get others on this thread interested in the FO area is I think the same type of logic that determines when stocks like AMAT are a good buy applies to the FO sector. Getting back to JDSU, I like that they have a reasonable amount of cash, I sort of dislike that they just did a big merger (some culture clash risk or integration risk). My guess is they will emerge out of this stronger and again be the "Gorilla in the Midst" in the FO world (Fortune article last year). I have been nibbling cautiously on JDSU. It blows my mind that the analysts have been so terribly wrong on the FO sector, and so I am using them more as a contrary indicator now. I think that whenever we hear the "dead money" argument, we should consider buying if it is a great company since they are often way off on their predictions of how long it will take to come back (tend to be too pessimistic in bear markets on this I think).
I feel safer with GLW rather than JDSU, so I have been buying more of GLW. So far I am getting hammered, but I remain hopeful. Smart Money today just did a bullish article on GLW. I will post the link. It is true that GLW did a big realignment towards FO a few years ago, but I still like the fact that the company is 150 years old. What other tech company can you say that about? Seems like a sure bet they will survive, unlike the Exds's of the world.
Thanks for your post.
John |
