ACTM $100 Million Cable Modem Contract with MOT Message Board

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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT

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To: Sonny Blue who wrote (202)	9/19/1997 11:57:00 PM
From: jeffbas	of 1250

I agree that it looks a lot better! After extensive review, I decided not to increase an already large position at the 33 level. I will rarely buy a stock that I think is going up for technical reasons unless I also think the price offers excellent fundamental value. There are too many unanswered questions now about the future growth rate (that did not exist 6 months ago) that I believe that a p/e above 25 times current year estimates is unjustified at this time (equivalent to a price of 40). The growth rate questions: -Will the huge (35% of sales) BAY business segment grow at a rapid rate or be a drag on the overall growth rate by being more stable? -Will the drop off of 3Com business this quarter interrupt the growth trend at all? -Is the decline in the Cascade business over the last couple of quarters, together with the Ascend takeover of them, and Ascend's apparent difficulties, a sign of a problem here? -They are adding significant capacity in MA and Ireland (announced), and presumably in the Southeast. Will this go smoothly and will they have the sales for these facilities to cover the expenses? -They plan to make a Westcoast acquisition? Will they make a good one? -Sales have been up year-to-year but almost flat sequentially for a bit. Will sales accelerate now as mgmt has said earlier this year? Don't get me wrong, however. I think it will rally to 39 (and stall), waiting for further fundamental/earnings developments. For me a potential 15% move near term in a very richly priced sector is not enough for new money. If the group were to sustain a well deserved correction, ACTM would do well to hold its own. What I am really looking for is for a positive resolution to some of my questions, a correction in the sector, and an opportunity to buy ACTM, after this rally, near or below the recent lows - for a good trading and better fundamental investment then. (I am quite perplexed that the Advest guy, having done the work, did not upgrade the stock from his recent hold at 46 5/8 to buy. Maybe he did it today and we have not heard yet?)

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