Andrew: In a discussion of valuation, numbers are more meaningful than
words. To that extent, I felt it necessary to highlight the need for quantifiable terminology in preference to descriptive language which is less definitive. No further implications were intended.
Generally, the market does not increase the valuation of a Prime Contractor if the prime enters into an alliance with an O.E.M. All primes are dependent on their Subs. However, for each prime there are generally 3 or more Sub Contractors. So it is not a complete disaster when a Subcontractor fails . This is true for all major Enterprises.
However,the market handsomely rewards a majority or minority take-over if that transaction is not dilutive to earnings. The take-over is a standard way of increasing growth when a Company's internal growth is unable to deliver. The integration of the Banks, Telcos and Networking Companies including NT and Bay are proof in favor of my submission. "Big is beautiful" has always been a favorite mantra with Investor. Even when Govts have broken them up they come back to rejoin (e.g Baby Bells)
I really enjoyed reading your last para where we joined in common cause. After all you and I are here to improve our Financial lot thru Investments. There are excellent sites for details of the technology. If you analyze the many thousand messages on NN, you will see that the bulk (nearly 90%) are devoted to topics other than valuation and analysis of NN's Balance Sheet and Income Statement. It is likely that those who made money spent near 90% on valuation and 10% following every twist and turn in the technical domain.
I hope that at any one time we can learn from them and arrive at a common goal of deciding a short term risk/reward , long term risk/reward at any given instant. In time, we could hone our skills and move in parallel but ahead of the tape.
To put all this to action, here my assessment for the next Q. Current price $21, risk (max $5 if DJIA breaks down, $1 if it holds), reward $10 max.(based on whisper earnings). A long term projection will have to wait till the new COO promulgates his game plan.
Regards. |
