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Technology Stocks : Wind River going up, up, up!
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To: Golfer9 who wrote (192)7/25/1996 2:01:00 AM
From: Allen Benn   of 10309
 
>>…high PE’s can be justified if the company has in reality a moat around it….do you think that it (WIND) has the moat around it to protect it from the outsiders?

You are correct. That is why I wrote "While this is a giant improvement over the use of trailing PE ratios, for franchises a longer look into the future is justified to determine intrinsic value of a stock." Notice the use of the phase "for franchises", which I believe equates to your "moat".

So, we agree that high-growing franchises often deserve high trailing PE ratios. You hit the nail on the head by questioning whether or not WIND "has the moat around it to protect it from the outsiders?" This is the critical part of the analysis for the long-term investor, not WIND’s trailing PE ratio.

The short answer to your question about the strength of WIND’s moat, is that I think it is very strong indeed. I’ll try to post reasons for this statement in a couple weeks after returning from the Olympics - to watch not perform.

Allen
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