>>If Mr. Lawrence can shead some light on his thoughts it would be appreciated.
Oh, man, get that hook outta my cheek!
Paul, if we can't hold $30 tomorrow, $26 lies in the immediate future. It should handily bounce there, and consolidate with an upward bias. My investment mechanism of choice will be in- or very-near-the-money '99 leaps, although I'll be looking real hard at writing naked puts if the juice tastes sweet enough.
From a broad fundamental perspective, the company's diversification and distribution channels are second to none. They are number one or two in each of their principal lines. Long term, it still is a no-brainer. Networking is here to stay, and there are many competitirs with far weakers hands than 3Com.
More than anything, the fantastic economic conditions (low unemployment, low inflation, low interest rates, and decent GDP growth) are the result of the vast improvements productivity that have occured from technological innovation in the past 5-7 years. The networking infrastructure had a rush of buildout, but still severely lags the raw computing and storage advances that have been made during that period, and at this stage is the bottleneck holding back even more productivity advancements.
I believe the recent slow down in growth of the networkers (hardware) is the direct result of the consolidation going on in the carriers and in the ISPs. The last thing a company wants to do when making themselves attractive for a suitor is park massive amounts of capital in short-lived assets. The spector of consolidation remains real at the customer level (MCI/WCOM/SPRINT/BT/GTE/T/RBOC, etc), and the flood of buying of capital equipment will remain in check until some of these deals close and the landscape becomes more simplified. While that occurs, the weaker hands (hardware) will get gobbled up (Shiva, Microcom, Digital, Newbridge, Fore, Cabletron, etc.) It's the same thing that happened in the DD sector over the past couple of years, where there are now fewer players on deck due to condolidation. Meanwhile, there will be the usual ups and downs, to the delight of traders.
It'll be tough times for light sleepers, and a time of feast for traders and value investors with long horizons. I'll be attending both parties. |
