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Technology Stocks : Safeguard Scientifics SFE

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To: michael r potter who wrote (4108)	3/24/2000 9:37:00 AM
From: MGV	Read Replies (3) of 4467

Mike, Just a couple of comments intended to catalyze friendly debate. "I'll take 12% growth with a 6 or 7 PE [and low expectations] over 30% growth and 150 PE ...." As stated, no one should disagree with the above choice you make. The problem with it is this: The companies that are expected to grow 12% are in that part of the economy where there tends to be pricing pressure that makes the 12% growth estimate dicey. How many people do you suppose would have picked P&G as a higher risk stock than JDSU? In the end, the overriding issue that made the apparently less risky pick the wrong one was: P&G is feeling pricing pressure. JDSU is not. The point is that too much of the 12% growth estimates may very well be more illusory than the 70% growth estimates of the very best of breed technology companies. That does not mean the techs all are legitimate. Selectivity is that much more important because at higher valuations mistakes are that much more painful. On the other hand, combining 30% growth with a "150 p/e" understates the best growth companies that are growing 70% plus. VIGN has had 3 consecutive quarters of 60% plus sequential growth.

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