John, Mike & Tom's <b>Wild World of Stocks</b> Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : John, Mike & Tom's Wild World of Stocks

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: wlheatmoon who wrote (1020)	5/11/2000 12:59:00 AM
From: John Pitera	Read Replies (2) of 2850

We may well get to the 200 DMA on PMCS. a fairly upbeat article on PMCS..... Covering PMC-Sierra, Ho-Hum By Adam Lashinsky Silicon Valley Columnist 5/10/00 7:00 AM ET Watching for a surprise from rock-steady PMC-Sierra (PMCS:Nasdaq - news - boards) is like covering a Presidential vacation, on the off chance something besides golf happens. One day there may be drama from PMC-Sierra. Not today. I attend a presentation by communications-chip maker PMC-Sierra the way a White House reporter hangs out near the President's vacation retreat. She's there only in case the head of state suffers a heart attack; I'm there on the off chance CFO John Sullivan suggests in passing that the company is seeing major weakness in the Internet infrastructure business. The point is that nearly nothing comes out of one of these sessions. The President doesn't die. And PMC doesn't warn that its torrid growth rate is about to slow. But I go and learn -- again -- why go-go investors and serious techheads alike are gaga over this company. PMC-Sierra supplies chips to Cisco Systems (CSCO:Nasdaq - news - boards) and Lucent Technologies (LU:Nasdaq - news - boards) and nearly every start-up that plans to enter the networking-equipment business. (Its early relationship with Cerent only broadened its business with Cisco when Cisco gobbled up Cerent.) The company does not compete in the broadband access market (dominated by Broadcom (BRCM:Nasdaq - news - boards)) or the wireless market (where Texas Instruments (TXN:NYSE - news - boards) is the 900-lb. gorilla). It racks up 80%-plus gross margins on its networking-oriented products and is revenue is growing at a 50% rate -- to a forecasted $772 million in 2001, according to Chase H&Q. So PMC-Sierra's stock mostly goes up, except when Lucent blows a quarter or when folks renew their concerns about valuations. At $22 billion in market value, PMC trades for 137 times the $1.15 per share H&Q expects it to earn next year. The technology is mind-boggling, and I'd guess I'm not nearly the only person in the room not intimately knowledgeable about "high-density frame-relay port cards," to name one product Sullivan discussed. All you really need to know, Sullivan says, is that the potential of its whizziest products has yet to be realized because customers are still designing the gear that will use them. "The best is ahead of us," says the CFO. Here's one last thing to like about PMC-Sierra: It aims to invest between 22% and 24% of its revenue in research and development -- and to maintain operating profits of 34% to 36%. To put that in perspective, consider that Intel (INTC:Nasdaq - news - boards) plows about 11% of its revenue into R&D. The stock? Oh, it's down with the rest of the market, of course. PMC-Sierra's shares fell 6% to 157 11/16 Tuesday. But that's not really news. At least no more than the President's catching a cold

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next