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Technology Stocks : Dialogic ready to soar, funds buying
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To: David R who wrote (319)5/14/1997 8:19:00 AM
From: Jay M. Harris   of 674
 
One reason for the rebound is that Piper Jaffray upgraded DLGC to a Buy. They
are modeling a 23.5% increase in cal 97 revenue from $213.6 mil in 96 to $263.9
mil in cal 97. Also, they are looking for $1.19 in eps in cal 97 and a $1.80 in eps
for cal 98 on $336 mil in revenue. They are using a $36. 18 month target or
a 20X p/e on $1.80 of cal 1998 eps. The p/e appears conservative given DLGC's historical range which is all over the map. I prefer using a lower EPS #
or a $1.72 for cal 98 and applying a 25X p/e for a 12 month target of $43 for 72%
appreciation from current levels.

I'm quite surprized to have the street already upgrading this company given the
recent past of historical misses. I must confess that the market is telling those of
us that were long this stock prior to the latest miss that we were correct to stay
long. I have seen this price behavior countless times in small cap tech land.

I want to share with the board a quote from one of the great speculators of all
time Bernard Baruch. This wisdom has helped me tremendously in technology
investing with 60% moves being common place.

" The true investor (or, speculator) is one who observes the future and acts before it occurs. Like a surgeon, he must be able to search through a mass of complex and contradictory details to the significant facts. Then still like the surgeon he must be able to operate coldly, clearly, and skillfully on the basis of
the facts before him. Few things are more difficult to do. The main obstacle lies
in disentangling us from our emotions."

This is at the" heart" of why I have been long DLGC for the last 3 years. I would also suggest that Robert ; Larry and many who have participated on the
board and long this issue read Dr. Groves recent best seller " Only the Paranoid survive". This is a must read for this board as Andy provides his
vision of the internet and its impact on the Communications and many other
industries.

Finally, please remember that the information revolution is in its infancy and
those of us that have been long DLGC didn't MISS anything. We are at the
beginning of the greatest economic opportunity that has ever confronted this
country. IMO DLGC might impact the communications industry the way client
server computing is impacting the Computer industry. Hope this helps...

Happy Investing , Jay
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