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Technology Stocks : Newbridge Networks

NN 11.97

+5.3%

Nov 21 9:30 AM EST

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To: Peppe who wrote (6575)	9/17/1998 11:05:00 AM
From: Doug	of 18016

Peppe: The reasons why the opinion polls on this Board are so heavily skewed in favour of NN from Oct97 to now may never be known. It may be best to understand the facts. Facts: a: Market trend is down. b: Return of NN in the last 5 yrs has not exceeded that for the S&P 500. c: Telcom stocks have recently been hit due to lower expectations by Analyst. d: The rev/income growth rates for NN have not been able to sustain a parabolic P/E. e: Lead technology looses its advantage with time as more players want to participate. f: The expectations since Oct 97,were not in alignment with NN's trend line. Those euphoric posts about Mgmt and Analyst being awed etc proved to be disconnected from reality as borne out by the current price. Going forward the following market forces need to be considered: a: Global Economy except for USA and Europe is in a down trend. The global wash is expected to affect our exports. See G, PEP and KO as early examples and more to come. b: A trendline disconnect between the Telcom and Networking stocks is not considered favourable for the NETworkers. c: A drop in Interest rates is likely only after the stock market sees a new low which may impact Consumer Confidence and show up as lower Pre Xmas sales. d: The IMF funding to help Latin America tide its repayment schedules may be delayed as Congress is in no hurry. This may result in a devaluation run on the currencies of Venezuela and Brazil which could cause a serious drop in the Bank Index and the DOW. e: The P/E of the Networkers has not had a correction vis a vis the market. The caution flags are flying high and a discussion of how to protect ones already contracted Assets may be in order at this point. On the other hand there may be others who have a better handle on market forces. If so, we need to hear the facts and forces that spell better days ahead.

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