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Politics : Idea Of The Day
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To: jim kelley who wrote (29652)11/11/1999 4:05:00 AM
From: IQBAL LATIF  Read Replies (1) of 50167
 
Potential of rev growth is a yeard stick I use for any company.. look at SUNW MSFT and CSCO key finacial indicators..

SUNW.. 1994 rev- 4.6 billion 1999- 12.3 billion.
1994 EBIT- 277 million 1999- 1.7 billion
1994 EPS -.26 1999- 1.45
Now SUNW has been delvering consistent on average 25% return on equity and asset, if the progress of Java continues I don't see a reason to think that top line and bottom line would reduce to less than 20% growth pace.. 37 $ is a great price if we don't have this growth, include this growth factor based on past performance and new tech revolution you would need to smile more ofcourse if you are in stocks like MSFT CSCO SUNW... Look at MSFT 1994 rev 4.6 billion and 1999 rev 21 billion EPS from 1994 to 99 increased to .24 to 1.52, now CSCO 1994 rev 1.2 billion and 1999 rev 13.4 billion... now it is this kind of strong hold on the market and potential of future growth in line with the past performance that fools like me award high P/E to these stocks.

Now lets look at R&D expense of these companies and potential to make more, you owuld notice that sinking cost of R&D makes them the leaders and all these companies are becoming global monopolies, nice to see US busting MSFT on some foolish charges whereas they have been champions of innovation, the global players would like these companies decimated for only one reason they are global players of change... and have total domination..
By your formula if 1.6 billion of SUNW 1994 equity was invested in TB's at 6% in 1999 it would be no more than 2.1 bilion SUNW equity has risen to 5.1 billion in 1999, now give me a bond htat gives this kind of return I will shun the market.. Love and regards please do reply.
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