Paullie,
It looks like both briefing and Net bulls are including MCDT in the small group of the hyper-growth New Guard...
Briefing.com
Updated: 25-Sep-00
General Commentary
In a tumultuous week of trading, there was at least one discernible trend. Investors put money to work in the growth area of technology; more specifically, they targeted growth names that also happened to be profitable. Recent market weakness caused by earnings warning season jitters presented the opportunity to accumulate positions in the elite names -- companies with little to no chance of issuing a negative preannouncement. Among the standout stocks were Brocade (BRCD), Juniper (JNPR) and McDATA Corp (MCDT), each of which made new all-time highs (well, JNPR pulled up 1% shy).... Though you may not recognize each of these names, they represent the new guard in the technology arena. The appeal of these upstart companies is that they are still in the hyper-growth phase of their maturation. With the assistance of conservative earnings prognostication by analysts, these companies can usually be trusted to deliver over-the-top quarterly results.
The breakdown in chip and chip equipment stocks this month was no coincidence. (The SOX had fallen 14.6% in September before the Intel warning). Given that this sector trades in a boom-or-bust fashion, recent indications of slowing growth by industry members made this one of the less attractive places to be going into warnings season. Like everyone else, institutions have an aversion to being blown up. So, instead of chasing cyclicals with P/Es of 20-30, they continued to bid up growth names with 500x multiples.
NetBulls...
netbulls.com
Not all the news was bleak on the Nasdaq Friday, as witnessed
by Handspring's 22% rise after a CIBC Oppenheimer analyst
predicted that sales increases could outstrip growth by rivals
such as Palm. Shares of Handspring, a maker of electronic
organizers, have risen 78 percent this month. Handspring
licenses Palm's popular operating system and address book
programs for its Visor handheld computers. Visor organizers
will accept expansion cartridges, allowing users to play
music, make phone calls and perform other functions.
Despite this week's tumultuous trading sessions, investors
did establish a clear trend of targeting profitable growth
companies. This new guard includes Brocade, Juniper, and
McData, each of which hit new all-time highs. Earnings
warning season creates not only jitters that result in
market weakness, but also presents opportunities to
accumulate positions in elite names. Investors focused on
upstart companies that are still in the hyper-growth phase
of their maturation, and have shown to consistently deliver
positive quarterly results.
Although the investing world will continue to focus on the
carnage that Intel's warning produced Friday, we need to
step back and look at the big picture. Intel's problems are
not indicative of an insidious disease within the tech
sector. Indeed, some analysts believe that Intel's warning
addresses a technology paradigm shift from processing power
to bandwidth. Just look at the stock prices of bandwidth
purveyors such as Ciena, Nortel, and JDS Uniphase, which are
all outperforming Intel. Bandwidth is now driving the
technology revolution. We are currently in the early stages
of the revolution shift, with soaring bandwidth supply
outstripping demand. This paradigm shift reflects the strong
health and resiliency of the tech sector.
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