Dave Gore's Trades That Make Sense Message Board

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Strategies & Market Trends : Dave Gore's Trades That Make Sense

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To: Mark Konrad who wrote (3404)	3/4/2002 11:30:59 AM
From: Dave Gore	Read Replies (1) of 16631

GSPN --- boy, am I glad I own this one. It's chart last week was a "screaming buy" near $11 (down from $19) and here's some DD. From Jim Jubek's MSN/Money Central- Note: this positive article was written when the stock was $15, so there's a lot of upside here if the Market does well going forrward and not a lot of downside, IMHO. This stock was highlighted by Briefing as a big beneficiary of the telecom bill passed by Congress because it should result in a big boost for DSL and other broadband-related companies. "And finally a few companies have managed to force the necessary consolidation in their own industry segment and create an internal catalyst as well. GlobeSpan, for instance, has merged with competitor Virata to produce a single company with offerings in the physical layer and the networking layer for DSL (digital subscriber line) chips. That combination should help the company expand market share by selling a full chipset yet with lower sales and marketing costs. But GlobeSpan has also been moving to improve margins by moving established customers to higher performance central office chipsets -- that not so incidentally carry higher margins for GlobeSpan. The results of these moves were apparent in the third quarter of 2001 when GlobeSpan’s gross margins climbed to 56%, a 7 percentage point improvement over gross margins in the second quarter. When you see numbers like that for a company that has the kinds of catalysts that GlobeSpan has put together, I think you’ve moved well beyond the realm of wishful thinking and nostalgia for valuations in the bubble market of 2000. Yes, GlobeSpan did trade at $140 a share way back then. But if you buy it now, you’re not making a bet that the shares will move up just because they’re so much cheaper than they once were. Rather, you’re buying it because of current catalysts that have the power to move the stock higher from its recent price of $15, even if that level is far below its former heights."

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