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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.11+0.9%Nov 21 3:59 PM EST
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To: larry who wrote (46329)1/8/2001 1:46:29 PM
From: Tulvio Durand  Read Replies (1) of 77400
 
Larry, a recent WSJ article speaks to this valuation-still-too-high theme,

public.wsj.com

I felt the article does not properly address the growth-rate to P/E ratio in defining value, which then prompted my e-mail to the lead author which follows:

Mr. Brown, your January 5 WSJ article "Stock Valuations Raise Questions About Future" does indeed raise questions for this reader, but not those same ones you and your co-authors raise. My questions: (1) Why did you not point out that valuations of tech stocks like Cisco have been reduced disproportionally, by a factor of five, more so than the S&P 500 (50% vs. 10%, respectively) while their earning expectations have not decreased by nowhere near the same amount? (2) Why not point out that those companies possess significantly larger growth rates than the S&P 500 average? (3) If you consider their valuation high, what then do you consider their proper valuation to be? (4) If the valuations remain sky high now, how come you didn't say so back then when they were at least twice as high, or at least admit that that they are much better now?

With comments such as "... But it isn't clear that these companies' prospects have improved as dramatically as their share prices" in reference to Wednesday's one-day gains I detect a taste of sensationalism (fanning the fire) in your reporting rather than the dispassionate reasoning I expect from the WSJ.

Tulvio
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