Disk Drive Sector Discussion Forum Message Board

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Technology Stocks : Disk Drive Sector Discussion Forum

WDC 187.18

+2.9%

Dec 11 3:59 PM EST

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To: Mark Oliver who wrote (5009)	11/22/1998 10:47:00 PM
From: TEMFASSBAL	Read Replies (1) of 9256

Hey Guys Mark writes <<Z, the reason why I am hesitant on Hutchison is due to simple ideas on price-earnings ratios as a method of valuation. The fact that they are going from a hemorrhaging loss to breakeven is a good step forward, but they still have a lot to prove.>> Mark...as you know I've been following HTCH and the drive sector for a number of years so I'll chime in here with my rational RE: share price forward...first and foremost the past is most likely a positive now because the comps will look really good and right or wrong that matters...thus I think you really need to use forward PE #'s....what you need to remember IMO is that if fiscal 99 comes in at $2 or slightly higher its going to be back end loaded, thus the probability of a +$1 fiscal Q4 '99 is pretty decent...the market understands this and is already starting to price it into the stock IMO...it projects fiscal 2000 earnings off the '99 #'s and if you look at even modest sequential growth off say $1.10 in Q4 '99 the total fiscal 2000 number gets pretty big...its way to early to have any idea how legit these numbers are but in my experience thats what the markets starting to do here...and if Z's #'s are even close (say mid to high 30 cents we could be closer to $2.50 for fiscal 99 and IMO share price will be an easy 50% higher than here (people will be modeling $5ish for 2000 and with a 12ish PE forward you've got double)...not saying this is right just saying I'm beginning to see things that resemble 4Q 96 and 1Q 97...FWIW..as always JMHO... Tim

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