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Technology Stocks : Newbridge Networks

NN 12.96

+8.3%

3:59 PM EST

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To: Doug who wrote (4977)	6/5/1998 11:59:00 AM
From: j g cordes	Read Replies (1) of 18016

Doug.. there's never an absolute relationship between stock price and earnings growth. More often its the perception of market leadership and business potential that's consistently realized. LU for example sports a very high PE of 225, CSCO about 80 and ASND about 93. NN is well below that (forward pe if you want to be picky) because it failed market perception and business potential. It is exactly because, as you worry, the "The entire Communication Industry is now focused toward the high end of the spectrum.." that I feel NN will do better. If I may compare NN's public perception to that of a gold prospector who kept shouting that he'd found the mother load in Alaska... but never quite came up with the goods, thus his backers withdrew some support. Then another and another prospector finds ATM gold and our original prospector suddenly finds himself flush with new opportunity. This isn't a guarantee, but having competition in your field is the greatest compliment of your original insights and motives... it means the market wants to buy. I expect you'll start seeing perception change.. with upgrades born of competitors interest making NN's products all the more visible.

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