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Technology Stocks : Creative Labs (CREAF)
CREAF 0.4700.0%Dec 26 9:30 AM EST
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To: CJay who wrote (6402)12/4/1997 12:12:00 AM
From: Douglas V. Fant  Read Replies (1) of 13925
 
BZOOKA and CJAY,

The slowdown in business will affect earnings growth in tech stocks next year. But the amount of affect depends upon what percentage business one has in Asia (Latin America is not a big market yet) and also whether one runs a high fixed-cost business. CREAF scores fairly well on both points.

In the last three days CREAF has fallen about 22.5%. Now does that fall correctly account for the potential lost business? I noted earlier that ASND and INVX two other stocks I own did not fall much today with earnings warnings in their respective networking and DD sectors. In fact most of the stocks were little affected and even COMS which started five points off in after hours trading after an earnings warning yet finished the day basically unchanged.

Now I am not saying that CREAF will spring up like a jackrabbit, but I am now wondering, judging from the performance of various tech stocks today whether we are reaching the point where any Asian slowdown is now factored into most tech stock prices.

Come on- we had a banking crisis in the US in the late 80's and how did it affect the stock market (Do you remember that you could have bought Citicorp for $13/share??). Yes you're right- 1998 will be a battle between lower interest rates pushing stocks higher and lower earnings estimates due to Asian contraction pulling stocks lower. Perhaps we overcompensated on the latter factor over the last few days?

And finally remember that PC-DVD sales are not factored into current CREAF earnings estimates. So the slowdown generally in Asia again may be offset by growing PC-DVD sales in Europe and North America....

Sincerely,

Doug F.
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