To all-Dow off 299 or 3.4%,Naz off 65 or 3.5%, Tellab's off 1.87 or 2.5%. My comment.
Worry about Japan,lack of concrete US earnings reports,program trading, more after the fact bearish brokers and analysts hitting the press- are some of factors hitting wall street. I look for bearish Chip Hunter to come back to the string.
Japan represents about 2-3% of gross sales for the old Tellab's, maybe 4-5 % of sales of Tellab's + Ciena combo, that in my mind is a done deal. Remember that 88% of Tellab's last quarter's sales were in Titan and Martis, with very little of that in Japan. Japan and the other Asian nations need to take a hit, due to their previous feverish spectulations, but that does not change the global drive and spending for information age data gearing up and egt. purchases.
Go to http;//quote.yahoo.com/q?scTLAB&d=2y to see Tellab's chart over the last two years. Draw a line from it's price of $32 in July,1996 to it's current price of $73.43 on August 4,1998. Look at the upticks as well as the downturns in the price over time, to get a feel for how this stock advances over time.
Now this doesn't mean that if you just bought Tellab's at $92 and found that it went down to $73.43, that you are not feeling some real pain, and wondering what us long term holders of Tellab's are doing in such a grubby stock. But we told you that Tellab's beta was 1.6 or that it's volatility was 60% greater than the average stock, and that our outlook on the stock was long term hold, not exactly short term straight up profits in share prices.
Looking at 1/1/98 price of $56 for Tellab's and going to yesterday's price of $73.43, still is an increase of 31% for 7 months, which still beats CD returns of 4.5% for 12 months.
If we have lost some of you paniced short term holders, I quess I don't blame you for jumping ship, but the fundamentals remain the same for Tellab's, their goal is to go from $1.2 billion gross sales in 1997 to $6-8 billion gross sales in 2004 or so, with corresponding or better increases in net profits per share along the way. As net income per share goes up, then share prices are driven up,within the ranges of PE prices of a particular stock. Remember that the second richest man in the world Warren Buffett,does not even have a stock ticker in his office, and his game plan is to have long term hold in stocks that are growing at least 22% in net income per year, a rate way under Tellab's rate of growth of net income of about up 56% per year .
DAVE DICKERSON |
