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Technology Stocks : DSC Communications

DIGI 0.0001000

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Nov 28 9:30 AM EST

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To: Yeadon who wrote (3357)	1/17/1998 6:43:00 PM
From: van wang	Read Replies (2) of 4429

SMI MARKET NEWS ARCHIVE DSC COMMUNICATIONS: UNFAIRLY PUNISHED DAILY SCREEN Sector Screen: Finding Fertile Ground FACE-OFF Is Asia Ripe for the Picking? FUND NEWS GAM International: It Pays To Be Picky DUELING PORTFOLIOS Howard Sours on High-Tech BROKER RATINGS Best and Worst Online Brokers ASK SMI Answers to Your Questions SMI POLL So Much for Herd Mentality MARKET INSIDER Show and Tell: 23 SmartMoney Picks to Report Earnings The Week Ahead: Earnings & Asia The Best of the Big Money Funds Boston Scientific Hits the Recovery Room Earnings Scorecard: Winners Still Outnumber Losers Garzarelli's No. 1 Sector: Chips SmartMoney Gainers and Losers SMI Earnings Calendar ARCHIVE Complete Five-Day View ONE OF OUR recent stock picks -- DSC Communications (DIGI) -- got clipped Thursday along with the rest of the telecommunications equipment group after three Wall Street analysts unleashed a round of rating downgrades and earnings estimate cuts for rival ADC Telecommunications (ADCT). At issue for ADC is worry over orders during its seasonally slow January quarter. But that's not what pushed DIGI shares nearly 5% lower. Both SoundView and Bear Stearns noted that capital spending from the Bell companies would not be as robust as last year. "They are getting off to a slow start this year," said Chandan Sarkar, analyst with SoundView Financial Group. That stung DIGI shareholders because its customers include several of the Baby Bells, Bell Atlantic/Nynex, Bell South and US West. In fact, we chose DSC as part of our "Where to Invest in 1988" portfolio in part because of its strong relationships with customers. Is it time to panic? No way. DSC spokesman Terry Adams tells us that the company has no product overlap with ADC. Adams declined to say anything about the pattern of Bell spending because the company is scheduled to release quarterly earnings Jan. 26. But the pattern increasingly in the industry is that analysts don't get a handle on corporate earnings until the eve of the earnings release because customer orders come so late in the quarter. We've liked the telecom equipment group because demand for the group's products is clearly building, and stocks in the group have been priced well relative to the S&P 500. We're not inclined to change our minds because of today's ADC announcements. Better to get it from the horse's mouth later this month when DIGI releases its earnings.

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