Thermo Electron (TMO) Message Board

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Technology Stocks : Thermo Electron (TMO)

TMO 567.84

+0.4%

3:59 PM EST

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To: John Hayman who wrote (303)	8/24/1998 6:59:00 PM
From: Scott Ferguson	Read Replies (2) of 450

I just read through a brief explanation of Merrill Lynch's recent downgrade of TMO from Buy to intermediate term neutral. Merrill's downgrade was based on reduced operating earnings primarly from Thermo Instrument's Thermo Quest sub. Numbers imply revenues will decrease year over year at Thermo Instrument. Internal growth rate at Thermo Instrument appears to be under pressure from historic levels with uncertainties over Asia (primarily Japan) and possible slowdown in capital spending in US. Also mentions that TMO is seeking a large biomedical acquisition, but that nothing on this front has happened or appears to be happening any time soon. Without crunching some seriously complicated numbers (one of the problems with this stock) I can't see how revenue shortfall in one sub can impact the bottom line for all of TMO so thoroughly. While a change in focus from spin outs to core businesses may depress earnings in the short term, it seems to me that it could (COULD) help to simplify TMO's structure, which has always been so difficult to grasp. I think it's complicated structure has been an impediment to large scale acceptance of the stock as a good investment. Just too hard to understand where the money comes from. I'm in a difficult situation. I bought in over two years ago at about $42, having been lured by 14 years of rising stock prices, so I'm down over 50%. I originally bought TMO as a core long-term holding, with at least a five year time frame in mind. To bail at a substantial loss after less than three years seems a premature throwing in of the cards and going against my original strategy. After all, they are still growing earnings. However, if they are becoming a different company, then perhaps a change is in order. I don't want to pull out just because the stock is out of favor, only to watch it catch on and rise later. As you can tell, I'm torn on what to do with TMO. No other stock in my portfolio is giving me this kind of "what-do-I-do-know?" grief. I'm really at a "loss" with this one (in more ways than one). >>>Scott

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