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Technology Stocks : ICO (Inacom) LeadingTech Mgmt Services Co

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To: Joe Dancy who wrote (193)	4/26/1998 11:08:00 AM
From: george K.	Read Replies (1) of 274

Everyone who holds this stock should read this post. Frequently we are all tempted to take short term profits when they come quickly. DO NOT LET THAT BE THE CASE WITH YOUR INVESTMENT IN INACOM. You will see much higher stock prices over the next two quarters. Let me summarize why I feel this to be the case: Inacom's earnings skyrocketed in spite of the additional service technicians hired by the company during the first quarter. Two hundred people were hired and trained, but not yet deployed in the work force to earn revenue. Inacom made a strategic change in its service management, removing responsibility for hardware sales from its service managers and hiring many new managers to accommodate the expected growth in this area. As service revenue are added, these costs will be absorbed over many more dollars, and eps will climb. Inacom earned .54 for the quarter, 29% higher than last year, in spite of its investment in service techs and management structure. Inacom's large eps gains occurred after a large secondary offering, and much of the money raised has yet to be utilized. Imagine where earnings would be if more shares had not been put out. The leveraged use of this capital will show up over the next few quarters when more acquisitions are completed. Inacom is in a position to take advantage of the consolidation in this industry. Recall what has happened to share prices to the most successful companies in a consolidating industry: UP UP UP. Earnings estimates are low: Analysts underestimated the profitability of hardware sales direct to end-users, where gross margins are closer to 9%, not 2.4% as in pure distribution. Inacom's sales to end-users increased nearly 38%! *This company can earn over 2.65 this year and 3.20 for next year. No joke. This stock price would look very low at $40, let alone $35. I see a much higher price going forward. I recently returned from the shareholder meeting and am writing a summary of all that I learned. This stock is very undervalued. If you would like a copy of my summary, e-mail me and I will e-mail it back to you. Unfortunately, it is too long to post here.

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