Rocky, the season slowdown in computer sales is being factored in the prices of the hardware industry now. That is why information/content stocks like excite, yahoo, and aol are soaring and the hardware Sox index and DDX index are laggards (among other very important reasons).
I think that the lack of information from IOM during this quiet period creates a greater sense of risk, than in quarters past. Because of the uncertainty surrounding the financial outcome and next quarter outlook, I grant the probability of $4.50 is actually not insignificant( sorry, i had to use Greespan speak, just once!), its about 30%+.
But the accurate method of valuing companies is to look at their forward earnings/cash flow prospects and discount them back to the future. In a low interest rate environment, this can mean multiple expansion. Your comment on PE's of 15 may or may not be accurate. On trailing PE it may be accurate, but on forward PE it may not be. I have not looked at it in depth yet. But if Earnings are $0.30 for calendar 1998, then a PE of 30 may or may not be appropriate if growth is stable and assured at 15-20% per year. If earnings improvements for 1999 are foreseeable, then you might want to take a reasonable PE growthrate into 1999 estimates.
As for your assumption that Iomaniacs are too steadfast in their support of the company, I think recent posts on the thread point to the healthy presence of bears, including former supporters of the company.
I think that the CC will contain much bad news on sales for Q1 and for Q2. s. Batch's reports from Ingram shows a decline in sales as the quarter ended 3/27. Sales should be soft as we enter the "waiting for win98" season. Revenue projections for Q2 should be lighter than for Q1. This may be the catalyst for the $4.50/$4.80 stock price.
But at that price, I hope to enter this stock...
BL |
