I'm here Martin, and still short. Still getting killed, but I'm patient. Low volume for COMS today. I admit, still an impressive performance though, on a day the Nasdaq lost over 30 pts.
I'm thinking 3Com management is craftier than I gave them credit for. They admit that Asian sales have gone from 50% growth to flat, with no way to predict when that will change. But when they preannounced, they focused purely on the "inventory problem", and announced steps to make this better. Thus, Asian problems are overlooked, and lost in the shuffle of getting x product line down to x weeks inventory in the channel.
I would be interested in knowing what sales/earnings would have been had the channel inventory not been altered, but allowed to remain at x weeks per product line. My guess is that they would have missed earnings (sluggish modem sales, Asian sales flat), and the stock would have been treated to a similar sell-off as Oracle saw. By actively reducing sales/inventory levels, actual quarterly performance comparison w/prior quarters is impossible. These guys are masters at sleight of hand.
I'm thinking, what's wrong with overlooking the next couple of quarters (in other words write off FY 98), and run the stock up now to a forward FY 99 (ending May 31 99) PE of 30. At $1.99 est, that would put COMS at ~$60. Then by May 98, I'm sure analysts will have the FY 2000 est (30% y/y growth) of ~$2.60 ready, and the stock can be run up to $78 in another month or so, say by July 98. Anyone see anything wrong with this senario? -G-
DK |
