Mike,
Don't kick yourself too hard for selling LU early.
1)nobody ever lost a dime by selling at a profit
2)the odds of EVER selling exactly at a top are slim to none
I can't say I share your enthusiasm for the company, even at a lower price. LU supposedly is THE supplier, with THE technology, and THE lab wizards. Well, where are THE profits? Last I checked they still seem to run at about 5% after-tax, hardly earth shattering for THE company with high proprietary content. The argument probably is that they were held back all those years by ATT and now that they're free.... Well, seems to me all their senior guys are still the ATT vets they were before the umbilical was cut.
Ask yourself this - if they're such a great company, smack dab in the middle of a worldwide telecom infrastructure buildout, with sales growing at 30% plus, how come sales per employee (1997 figures) is a measly $198,000? My answer is summed up by one word - legacy - as in legacy employees, legacy management systems, and legacy retirees (think about that one). I don't doubt they are a world class competitor, but they have yet to prove to me they are a world class money machine. Nortel, not surprisingly, sports a similar S/Emp ratio. A more interesting little money machine that I know you are familiar with - Tellabs - does $350,000 per employee and makes 20% after-tax.
And QCOM (sorry to be on-topic again) is currently at about the same sales/employee ratio as TLAB, so they are on the right track. When they get to the same margin figure we can both retire.(And I can change my sign off to the one below)
-JLF
$10 billion sales=$2 billion net=$27.40 eps=$550 price
who cares if its not this week |
