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Technology Stocks : Wind River going up, up, up!
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To: Allen Benn who wrote (683)3/19/1997 9:52:00 PM
From: Allen Benn   of 10309
 
A couple of days ago I read that Schwab accounts for almost 50% of electronic trades. This caused me to wonder what the zillions of Schwab investors got when they asked for a Charles Schwab & Co report on WIND.

Unlike most reports provided by brokerage houses, Schwab & Co produces theirs automatically, without human involvement. Grab ratings from a service like First Call, integrate price and performance statistics from other sources, and generate a new report every few days.

What does the individual investor see about WIND from Schwab? A total mess. Schwab rates WIND a "hold" because 2 analysts rate it a buy/hold and two have it unrated. Unrated reports obviously count negatively. It is wrong and totally misleading.

Not to worry, just look at the performance numbers of the company. EPS is depicted as growing nicely from 1993 ($.03) to 1996 ($0.64), but the last four quarters only show $0.43 vs. the last four quarters estimate of $.64. WIND must have missed the estimates by 30%. The 1998 estimate (which I guess is two years in the future) calls for earnings of only $0.53. WIND is apparently moving backwards, not growing as we and all analysts believe.

Let's check next the estimate for the next quarter. Specifically, the "98 Q1E" is $0.09 vs. the "1996 Q1" actual of $0.09. I think this says either that the first quarter of this fiscal year will be flat year-on-year, or that it is flat compared to two years ago. In either case, WIND is not growing one wit and barely deserves the "hold" rating.

You guessed correctly if you bet that I called Schwab immediately and led the representative step-by-step through their tangled series of misinterpretations. Of course they were totally confused by the recent split. Fiscal versus calendar year labels are screwed up. And I have no idea why they can't pull down ratings properly.

While we might care less, it is inexcusable that all those investors who tally to 50% of electronic transactions are feed completely erroneous information about WIND! It will be interesting to see what happens to the stock price after the report gets corrected.

Allen
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