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Technology Stocks : Cascade Communications (CSCC)
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To: Vladimir Zelener who wrote (3079)3/23/1997 2:53:00 PM
From: Zeev Hed   of 3743
 
Vladimir: I think that the current decline in the high tech is more endemic than last year's fall. Then the semi suffered from the beginning of a growth recession, now it is seems that all high tech sectors are going into a period of no or very little growth. It is starting to affect all sectors. When such low growth periods come around, the participants tend to increase their competitiveness and increase sales by reducing prices, this means that margins in general are going to decline. This when the pricing of their raw materials have stabilized (at least for the last few weeks). I would stay out of any networking and semi stock selling above 20 PE, since I think some of them are actually going to see no growth or little growth quarters (COMS had only 17% growth in the last report, and after the first sigh of relief, it continued back down). Those that are already under 20 PE should not be touched because these are tthe week sisters in the group and will suffer the most in the coming debacle. I am actually of the opinion that the next leg up may very well start with the semi this time, followed by the semi caps and only later will the networking stock come back. I do not think that a meaningful recovery will start before late spring. After selling my last high tech last week, I am completely out of the sector and quite heavily in cash.

Zeev
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