Digital Equipment Corp. (DEC) Message Board

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Technology Stocks : Digital Equipment Corp. (DEC)

DEC 14.60

+2.0%

Nov 21 9:30 AM EST

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To: Tom M who wrote (2752)	1/20/1998 8:42:00 PM
From: William L. Vu	Read Replies (3) of 3276

Tom, I do not think that DEC will go down from here. 1) From fundamental point of view: DEC was heavily distributed in December with the EPS revision. At that time DEC future was uncertain with SEA impact unknown. Investors do not handle uncertainty very well. So DEC price drop too much IMHO. Now, impact of SEA on DEC is more or less known. DEC business in Europe is very good. Europe business is strong. (IBM shows Europe revenue down for this quarter while DEC has its Europe revenue increased). So for the near future, there are no black cloud that may effect DEC EPS. While on the far horizon, Q4 DEC EPS look very good. DEC EPS is FY98 = 2.22 implies DEC Q4= 1.22. At this point DEC has a string of positive EPS and with good Q4 EPS outlook, DEC should have a higher price. It is also worthy to note that DEC has retired $250M in last quarter, and with the appreciation of the dollars, DEC is in much better position compared to other technology company. The depreciation of SEA currency has made the survival of many small tech company being questioned. 2) On the technical analysis: DEC has gone above the 20,25,and 50 day moving average. DEC has formed an uptrend (just broke through the down trend). DEC has complete the clasical 5 wave down from 54 to 34. The size of this correction is about right (60%) for the Elliot (SP?) wave 1 that go from 25 to 54. DEC is now forming part of wave 3 uptrend. IMHO DEC will form wave 1 sub of wave 3; that mean DEC will correct once it get near [50-54]. But then DEC will reach wave 3 of wave 3 in the July time frame. By then the $70 is very achievable. Will the fundamental support price higher than $70 ? I will wait to see; but recently many of my friends who trade purely based on TA has supprised me with their price movement prediction. Things has come out of the left field (at least none of the analyst has seen it) to cause the SEA induced Oct-27 mini-crash; the DD oversupplied price drop. I wished I had listen to them in Oct when DEC look so invincible. Anyway, from both TA and fundamental point of views, I see DEC on a near and long term uptrend. Best of luck.

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