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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-58.1%

Nov 14 9:30 AM EST

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To: joe who wrote (17747)	6/19/1998 2:48:00 AM
From: hitesh puri	Read Replies (3) of 45548

The Media writes stories on stocks that people want to see. If a stock is down the stories are about how bad management is, or how the products suck or how the employees are leaving. If a stock is roaring there is no mention of the negatives at all but rather how well the company has executed and will continue to do so and how their products are great and will be so for infinite time. Basically, to put it in a somewhat simple way they try to extrapolate existing conditions for the company and there is nothing new in the content of the writeup, just simple reiteration of what most people know but peppered with with a variety of phrases stating the obvious. Now, history has shown us again an again that one cannot simply do that, specifically for a tech company, because there are way too many non-linearities (variations) in the future of a high-tech company to justify a linear extrapolation. Let me embellish with an example of Ascend Communications : Sept 97 to Dec 97 was a period for ASND where the media had a field in blasting ASND and its MAX TNT 56k glitch to no end. Every article would talk about the MAX TNT failing and "Titan Cisco" getting into the Remote Access space and eating Ascends lunch, 3Coms breakfast and a lot of snacks. Nobody and I repeat nobody questioned what "800 pound Gorilla" Cisco was doing in the more lucrative and faster growing WAN product area. The fact is, as everyone knows, that Ascend was paying more attention to this higher margin cash cow while Cisco was trying to enter a game in the final minutes when RA port prices were plunging and margins had hit new lows. But everyone was so enamored with darling Cisco entering the contest when most of the participants had paraded, won the prizes and were moving on to the next one. That is one of the reasons why Ascend is kicking serious Cisco butt in the WAN space and winning almost all new deals. In November 97 I emailed the Networking correspondent of a very popular online street editorial in response to a very negative writeup on Ascend and plain glorification of Cisco which I thought was unwarranted. I basically asked him if he even knew what Ascend was upto and why he thought all its future was Remote Access ? He was polite enough to acknowledge that his info was limited and would welcome some Valley talk about Ascends future. I pointed him in the right direction and boy, have his articles become more accurate and not surprisingly the stock has followed. I am not sayin that it was his writeups that caused it but rather he saw light and later so did Wall Street when they saw the Cascade gem shine. Today after 7 months Ascend is a star again. The point I am trying to home into (I have to sleep now) is that the people in the media (be it print or TV) are just doing a job. They have no vested interest but you and I do. So we have to rely on our own research and not ignore signs that are staring at our faces. -hitesh

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