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Technology Stocks : PWAV- the hot new IPO
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To: Stan Howe who wrote (701)1/23/1998 8:45:00 AM
From: Dr. J  Read Replies (1) of 1491
 
This company also has 68 million in the bank. Aproximately 40% of the current capitalization. Not often, can you get this close to buying a tech. company at these valuations with well respected products. This company has the reserves to wait it out while gaining more domestic exposure.

I agree; normally a high-tech company with lots of cash also has relatively high fixed expenses (SPCT is a good example, with their fab costs - beneficial in good times; a drag in bad). But PWAV has fixed expenses of $25m/year (even assuming S&M stays at same levels) or over 2 years of operating cash even after backing out current liabilities and assuming all receivables went bad.

I like to compute adjusted PE for companies with lots of cash by subtracting cash/share from the price and interest on cash from earnings: this gives PWAV an adjusted PE on FY97 EPS of about 7.

That said, I think the stock could still go lower: there's no rationale to prices when a hot stock goes cold...
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