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Technology Stocks : BAY Ntwks (under House)
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To: George A. Roberts who wrote (6931)8/13/1998 1:22:00 PM
From: Kenneth E. Phillipps  Read Replies (1) of 6980
 
Hi George - You are asking the same question that all Bay shareholders of some duration are asking. Before you sell and put the money in Cisco or Lucent, I suggest you check the PEs of those stocks for the past four quarters. Both are around 55 vs 45 for a stock like Tellabs which has similar margins and growth to Cisco. When Bay and Nortel are averaged, they have a combined PE of about 45 for the past four quarters. An analyst on NBC yesterday pointed out that stocks like Cisco, Microsoft, Dell and Intel are the last stocks to drop in a major correction. He thinks they will drop in October. I think the downside risk for Bay and Nortel is less than Cisco and Lucent. Yesterday, there was an article on the front page of the Seattle Post Intelligencer written by a columnist from Blomberg News warning of the risks with high PE stocks at this time. All of this, of course, just my opinion.

Ken
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