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Technology Stocks : VTEL: Anyone else follow this?
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To: Fred Williams who wrote (686)7/31/1997 12:33:00 AM
From: E_K_S   of 1214
 
Hi Fred - I agree with your view for the industry. What is your time table for this growth to occur? I have been waiting now for 18 months and believe we will begin to see this growth next year by Q1 1998. According to Yeadon it may take six months before we see revenue from the new VTEL products which would reflect in the Q2 1998 report.

Let's assume that Q2 1998 is the period we need to use as the measure. What revenue number from VTEL will support your position?

I believe if VTEL can post a sales number of $30 million with profits of $0.15 per share will show that management has the company on the right track. Also I would like to see new joint ventures and partnerships (company marketing alliances) announced over the next eight months. We have heard nothing at this point.

As a value investor these are the bench marks I expect from this company. If management can deliver the above results then I expect the stock to be selling at a 15 PE - 20 PE based on forward looking PE ratios. I also assume no growth in my calculation of 1998 earnings. The price of this stock is be based on the market's expectation of the forward looking growth rate. Therefore if you assume a 20% growth factor the stock value should be $12.00.

My price expectations by Q2 1998 if the above is achieved is between $9.00-$12.00. The current stock price is $5 3/4. That is a pretty good return on your investment.

However, at current prices, I do not think the market pundants see the same value as this investor.

Regards,

EKS

P.S. I am and have been accumulating shares at these levels. I expect to pick up more shares in December and September. A very good method to pick up shares is to sell (naked) the $5.00 and $7.5 PUTS for these months.
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