RE: Juniper
Shamsaee,
John, I have to respectfully disagree with your valuation. It is much easier to grow your sales from 100m to 200m than from 1 BIL to 4Bil.
I said that Juniper would reach 4 billion sales in 2003 if it grows AVERAGE 100% annually. For a company that is going through hyper-growth phase, this is possible. Considering your argument that sales growth tends to slow down, I figured that Juniper could still have 4 billion sales by 2003 even if its growth rate drops 50% every year (ie: 500% in 1999, 250% this year, and 125%, 63%, 32% in subsequent years).
The networking sector has other players and it is misleading to believe that jnpr will pick up 40% of it by 2003.If that were true then that would probably put them past csco market share in 2003 because others like extr,newp,rbak,scmr are also gaining market share.
As Bruce Brown pointed out in post 30366, I wasn't talking about 40% of all networking market share, but only the router sector. Cisco and Juniper are two major players here (Thanks Bruce for listing names of all players in this field). Currently Cisco dominates this market with 74% share, and Juniper has 24%. However, last year's numbers were like Cisco 85% and Juniper 10%. Based on this trend, it's not impossible for Juniper to have 40% of this market in 2003. Cisco will still be a larger company because it has many other networking business besides router.
If I could ask myself what I learnt this year,it would be the fact that no matter how much you like what a company does you should keep some perspective and guidelines on how much is it worth.Most of us have this desire to be fully invested and jump in at silly levels where a little patience will pay off in most cases.Nothing goes up in a straight line and in most cases the best returns come from stocks that are beaten down and hated but with fundamentals intact.
Agree! That's why I did the calculation to see if Juniper's price is at a silly level. Gorilla Game principle can lead us to great companies, but it doesn't preclude us from overpaying them. We could either rely on our intuition (it would work if we're half as good as Lindy is), or on other methods to judge valuation of companies. Often one has to make certain assumptions or projections when doing this. I posted mine here so others like you could critique it. I'd rather be proven wrong here than in the market.
Thanks,
John |
