Oracle Corporation (ORCL) Message Board

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Technology Stocks : Oracle Corporation (ORCL)

ORCL 201.07

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3:59 PM EST

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To: Eric who wrote (3441)	10/20/1997 8:39:00 PM
From: hasbeen101	of 19080

Why worry about the next 8-10 years from Oracle? If Oracle can maintain 30% growth for the next 2-3 years the stock price will double and you will make a lot of money from buying stocks at this level. Maybe you're right, but we have to consider all the possibilities. Take the extreme example where Oracle grew at 30% for the next 3 years then instantly hit a plateau of 5% growth. An appropriate P/E if everyone knew for certain future growth was 5% would be no more than 15 in my opinion. The earnings would be slightly more than double the current level. Since the current P/E is more than 45, the stock price would actually drop about 30% despite the earnings growth. The hangover after the party is not much fun. That's why it's really important IMO to work out whether Oracle can keep growing quickly for 3 years or 8 years or .... . Professional investors often project earnings for 10 years. This is why.

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