To somehow lump Gateway in with Dell, Microsoft, Cisco, Lucent, Coke, and IBM is a bit of a stretch, to put it mildly.
For one, Gateway is by far a much smaller company than any of the others. Secondly, if you look at PE's, with the exception of IBM, the rest all have PE's of over 40, some of them way over 40. Unless Gateway bombs this quarter, their trailing 12 month earnings will be about $2 and their PE will be about a 28, which is about average for the S&P 500 right now.
You state that the market does not care about growth rates. My belief is that you are simply taking a short term view of growth rates. The outlook for certain industries for the remainder of 1998 definitely looks poor. But I currently have a 20 year investment horizon, not a 6 month one. If I base my stock purchases and sales based on my or your guess for the next couple of quarters outlook, I am a market timer, not a long term investor.
I believe that the predictions of the PC industry death are premature and therefore choose to invest in my company of choice in the industry.
If you believe, on the other hand, that this is effectively the end of the growing PC industry, I recommend you short or sell at any price.
Kory |
