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Technology Stocks : Newbridge Networks

NN 14.04

-1.2%

3:59 PM EST

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To: Ian@SI who wrote (6249)	8/29/1998 9:12:00 PM
From: Doug	Read Replies (3) of 18016

Ian: Thanks once again for that list of stocks. They are the Communication Eqpt sub Group of the S&P Mid-Cap List. Currently the Market perceives a need to overweight earnings certainty. The concept of high valuation and parabolic P.E's is not new. It was borrowed from the Japanese Mkt and re-marketed here. A.G had a good understanding of the consequences and was correct in alerting the street to the dangers of asset inflation. I studied that table again and the only parameter that I am comfortable with is P/S. This ratio is heavily used by Arbitrageurs in assessing take overs etc. The min max P/S for the group is 1 to 2.9. The P/S for NN is 3.41 which is above the band. There is nothing wrong with that when a Company's PEG has outperformed the group in a consistent manner. This discussion is about the certainty of earnings for the next Q in todays global market conditions. As I see it, these conditions have introduced more uncertainties for global players. Others longs may be more comfortable. If so I would like to know their rationale.

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