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Technology Stocks : Dialogic ready to soar, funds buying
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To: Robert Floyd who wrote (226)3/25/1997 9:14:00 PM
From: Jay M. Harris   of 674
 
Robert: Thank you for sharing your time with a very thoughtful and
well informed post. Please don't think for a moment that this
management team doesn't have the shareholder at heart. I may not be a
financial wiz, but I do have a good deal of experience investing in
technology stocks for my clients. For the record I'm Long the following
stocks with my clients:MSFT;CSCO;ORCL;INTC;AMAT;DLGC;NN;LSI;&USRX.
I have held these stocks for many years trying to capture the growth
of the information revolution. My performance is currently getting
trashed ,yet I hold on for the long haul.

All of the above stocks are extremely volatile. I rarely sell stocks.
I think of myself as investing in a business, NOT a stock. This prevents
me from creating transactions influenced by market volatility. A
descipline is important when you manage a lot of money because of taxes
and the excessive volatility that is inherent in this sector. All of the
above stocks have been down by 60% during my holding period with the
exception of MSFT.

Back to Dialogic. This is my largest "personal" holding roughly 30% of
my net worth. I have been wrong regarding the time required for this
industry to build momentum. However, I am correct in my understanding
of the potential size of this market, and that DLGC is the best way to
exploit this future market opportunity. I have followed this company
very closely since the IPO @ $11. in 1994. Dialogic has five elements
that I impose on every technology company. They follow:
1) Market share leader with 65% of the global open CTI industry.
2) Low cost provider with 62% gross profit margins.
3) Global distibution (direct & indirect) already in place.
4) Product;client;and geographic diversification.
5) Management Vision. This company is constantly obsoleting its own
products, and controlling the direction of it's industry.

The elements above Robert have greatly assisted me in successful investing
over the long term. However, they will not help with short term price
performance.

IMHO Dialogic is CHEAP. I expect them to earn $1.56 in calendar 1997 $
$2.00 in calendar 1998. This stock should NOT be at $27 per share.

The entire technology sector is weak because of the Fed tightning monetary
policy. This has nothing to do with the business prospects for DLGC.
I will reiterate my forcast of $60 per share or a 30X P/E on Cal 1998
earnings per share of $2.00. This management team holds over 7 million
shares, and they manage their company for the long term. I hope this
post helps you ,and others on the board keep the faith..
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