RE <<Were the "idiots" chasing CMGI, ICGE, JNPR, SDLI, JDSU, QCOM etc. etc. when they were technically
over-valued before running another 5 or 10 fold truely idiots>>>
Sorry, just couldn't resist commenting on this.....
I wouldn't say they were idiots.
I would say they were very lucky idiots.
As for YHOO, It is one reasons the NASDAQ (as an index) still has far to fall even though I am the first to say there are many truly undervalued stocks in the market now that are worth buying. Unfortunately, most of the bigger
cap names are still trading far above what they should be.
YHOO is a prime example.
The only reason it ever got the insane multiple it had
(and still has) is because of the strong earnings growth
it had. Obviously it is was considerably overpriced for
that growth, but let's not argue that because it doesn't
matter any more since YHOO is now a NEGATIVE growth story.
The company earned $.48 in 2000 and now says expect $.33 to
$.43. Even though that will likely be too optimistic,
we'll use the $.38 average. That's a DECREASE of earnings
of 21%. We all know what kind of P/E a company with
20% negative earnings growth gets - single digits. Let's
be generous and give YHOO a P/E of 10 X forward earnings -
yup, we've got a $4 stock.
Sure YHOO will survive, that's not the issue here.
What is a company with negative 20% earnings growth worth?
Sure $4 sounds cheap, but people seem to ignore that YHOO
(and the like) have split their stock to death!
Look at the per share numbers, which ultimately is all that
matters. EPS from $.48 to $.38 , a 20% drop, and even
at a P/E of 20 (which would be outrageous for negative
growth) it would still be a single digit stock.
Sales per share less than a MEASLY $2!
The "glamour" has left this sector.
Reality will set in and the valuations will become
"normal". That means YHOO will under perform for years
to come if it only drops tomorrow to the after market quote
of ~$24.
Do I really think YHOO will get to $4.
NO. It should , but there are too many people who
will think they are getting a bargain because......
"well, it used to be over 200, so it's cheap now"
DUH!!!
OK, I feel better now. |
