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Technology Stocks : Gorilla Game

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To: Clint E. who wrote (22)	3/31/1998 2:23:00 PM
From: Clam Clam	Read Replies (2) of 387

re. PAIR, I think the positive price movement is a combination of a couple things: 1) investors are starting to anticipate the PG-Flex ramp which management has stated will be in Q2 2) sector rotation into access telecom companies and 3) speculators seem to love this stock - the stock seems to go to extremes because there aren't many buy-and-hold investors involved with the name. Technicals look pretty damn good amid somewhat stodgy near-term growth prospects. My investment thesis on PAIR has been that if you have enough conviction in the franchise, at some point the P/E over-reflects the near-term and under-reflects just how hype-able this story could get: PAIR is the only real way for portfolio managers to buy a company linked to xDSL that trades enough volume and has a very resonable valuation. Telecom stocks usually get P/E's at premiums to their growth rates. I target PAIR's LTG somewhere in the vicinity of 25%. The stock could easily get a 30-35x multiple if xDSL hype accelerates. PAIR will do more than $1.00 in EPS in 1999. The math works for PAIR and what is the risk?? Even if estimates come down a little, the stock won't go below $20.

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