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Technology Stocks : GenRad Inc.(GEN) entering the ADSL market!

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To: Mark K. who wrote (38)3/19/1997 9:23:00 AM
From: Jeff Clegg   of 283
 
When I am asking about the 22%, I am looking forward several years.
If you are only interested in 1997 earnings, then I would say you are more likely a trader than an investor.

Situation #1: Genrad loses the Ford contract.
Result: Genrad's long term earnings decline by approx 22% (number supplied by you) and some restructuring is
required. That is, earnings are affected in '98, '99
2000, 2001, etc.

Stocks rarely trade at their current year's earnings
growth multiplier. Stocks are evaluated on Multiple
year earnings estimates. Multi-year CASHFLOW is very
important.

Situation #2: Genrad wins the Ford contract.
Result: How much revenue would Genrad expect to generate in
'97? Very little to None. Therefore - any impact of
this contract on '97 revenue is negligible, but long
term it would have considerable impact.
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