Lucent Technologies (LU) Message Board

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Technology Stocks : Lucent Technologies (LU)

LU 2.650

-2.9%

Nov 14 9:30 AM EST

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To: Zoltan! who wrote (8943)	7/30/1999 3:20:00 PM
From: Chuzzlewit	Read Replies (1) of 21876

IMO, with all deference to S&P, trailing P/E is an incorrect way of analyzing stocks. It is a akin to buying bonds based on last year's yield. The stock market is forward looking, and an investor is (or ought to be) interested in future prospects, not past. Invert the P/E and you have earnings yield and it makes no financial sense to use last year's earnings for that yield. The other important issue is that eps numbers are significantly clouded by merger and acquisition costs. For example, purchasing a company under purchase method accounting will yield totally different results than using pooling of interest accounting, because under the former additional costs (in the form of goodwill) are created, while in the latter there is no such impediment. TTFN, CTC

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