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Technology Stocks : PALM - The rebirth of Palm Inc.
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To: TechieGuy-alt who wrote (2261)10/19/2000 3:59:23 PM
From: David E. Taylor  Read Replies (2) of 6784
 
TG:

IMO, P/S of 20 is getting to the outer limit for PALM. Dell gets 10% of sales to the bottom line, MSFT around 40%. Even if we assume (hypothetically) that PALM were getting say 20%, P/E on this FY revenues/earnings would be around 100. OTOH, at 100% growth rate, PEG would still only be around 1.0, not unreasonable. If you use the DELL efficiency of 10%, P/E would be 200 and PEG around 2, pretty high.

At a P/S of 20, PALM would trade at around $70, so we're close to that right now. OTOH, if PALM can continue to grow revenues at 100%/year until 2003, then you could be sitting on a company with $16 billion in sales and a stock trading around $560 3 years from now. Roll that around your head for a while.

David T.
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