Mike,
"Someone mentioned that the earnings expectations are coming down,I beleive that is due to increased number of shares and I also beleive that we will comfortably beat those estimates.I found it conforting when Noam said that for the present quarter Southeast Asian sales would account for about 13%,"
Don't count on the company beating this quarter because 13% of sales from Asia is a lot. Asia was also supposed to be one of the largest pockets of growth for the company going forward. In case you haven't been paying attention to the headlines, there is a wide spread and very serious financial problem in the pacific rim and Japan is about to be included.
The past four quarters have shown sequential revenues like this, 36.94%, 14.59%, 11.15% and 6.20%. Clearly there is a slowing in sequential revenue growth and next quarters estimates show that there will be about 4.34% sequential growth in the earnings. I have yet to do a detailed analysis of the gross margins over the same period, but if they are falling, as I would suspect considering the competition is now entering the market, then there is a very small chance that the company will beat those estimates.
If you are going to buy this stock, I would not buy it because I think that the next few quarters are going to be better than expected, I would buy it because the situation in Asia may improve.
Wayde.
PS.
I am currently working on a detailed report on eight companies in the networking industry; ASND, BAY, COMS, CS, CSCO, FORE, MRVC and XYLN. I am hoping to have this report done before January 13, 1998. I will be plowing through the 10Q's and K's, press releases, industry reviews and publications. |
