RLM,
Since I started following COMS in January, I noticed that Benhamou has always hit the Value Line estimate right on the nose. I don't have the Oct 24th Value Line in front of me right now, however, if my memory seves me correctly, they estimate that COMS will earn $0.56 or $0.57 for Q198, ending Nov 30th. I am of the opinion that Value Line's $2.40/share estimate is accurate, so that would put COMS P/E going forward at 16.
I have a lot of confidence in Benhamou's vision of COMS dominating the periphery of the network...considering COMS sales growth, 28% sequentially from Q397 to Q497, one could make the arguement that the margin pressure is a transitory - COMS is successfully trading margin for market share so as to decimate its competition. This is a tactic CPQ employed very successfully and using this tactic COMS is bringing a lot of hurt on its less well capitalized opponents (ASND, ZOOM, DIMD for example). Currently, all the technicals that I use are bearish for COMS(3 vs. 22-VAMA, 13 vs. 55-VAMA and 100 day EOM), however, the long term fundamentals are very much intact. COMS has a slew of new products coming out over the next few quarters and should these product transitions be managed well, COMS has the possibility of greatly increasing margins at CSCO's expense.
Christopher |
