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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: LTK007 who wrote (60877)5/2/2002 10:43:48 PM
From: paul_philp  Read Replies (1) of 99280
 
itsallover,

i think we mostly agree. we have not seen capitulation (but i think i can smell it in the air). it will be a very long time before the Naz goes back up to 4,000 (it was only at 5,000 for just over a day). the majority of the boom winners will be slow growers at best going forward. we will never party like it's 1999 again either. however, technology will not be dead either. the companies I speak to have real business problems to solve over the next 3 - 5 years. they will invest when they have the money and they believe someone can deliver a real solution. our businesses are no less information and knowledge based now.

as for earnings growth percentages. a company with $100 million in sales and 1% earnings margins has $1 million in earnings. sales growth 20% over the next year to $120 million. the company has excess capacity so it doesn't have to expand and it does not need to hire right away so 1/4 of the new sales drop to the bottom line - and extra $5 million. Now we have $120million in sales, up 20%, producing $6 million in earnings, a reasonable 5% earnings margin BUT a whopping 600% y-o-y earnings growth ($1 million to $6 million). this is why earnings growth precentages mean nothing right now.

Paul
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