The New Economy and its Winners Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: techanalyst1 who wrote (9152)	10/12/2001 11:03:43 AM
From: Wizard	Read Replies (1) of 57684

>>We had a bubble The bubble ended many quarters ago in terms of artificial revenue growth. That is ancient history. We have now been in a drought for 3 consecutive reported quarters. IT managers are now as frustrated as the hardware and software vendor exec's and salespeople. Similar to stocks peaking in Q100 with one more excellent quarter to be reported (q200), we now have likely bottomed with one more very tough quarter still to be reported (q401). At the top, whisper numbers dramatically exceeded consensus. Recently (JNPR being great example), whisper numbers dramatically underestimated stability. Despite a weak Q401 environment, 2002 guidance will likely stay the same or go up as 2002 numbers are modeling an earnings 'U' and the reality is that earnings are going to 'V' sometime in 2002 with loads of variable cost cuts wrung out and only fixed cost structures left to depress current earnings... Sales will likely look something like a 'U' recovery in the beginning but earnings will be a 'V'... When the right half of the U kicks in for sales, growth is then going to show another leg of growth, causing acceleration - this is the 'law of small numbers' in effect... Earnings estimates were artificially high back in Q200 but forward numbers are artificially low now. Meanwhile, some of these stocks bottomed at very low multiples on depressed run-rates of revenues. That just sets the stage for a dramatic combination of high rates of growth off of small numbers combined with multiples coming from 2x cash or 4x depressed revenues or whatever... It didn't have to be that big a boom in 99/00 or this big a bust in 00/01 but that is what happened. It isn't really rational but so it goes. I fully expect one more round of market selloff but a lot of these stocks aren't going to go even close to their last low...

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next