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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!!
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To: otter who wrote (4811)11/6/1998 3:13:00 PM
From: Dawgfool  Read Replies (2) of 6565
 
I think that the selective numbers you displayed are very much on point. This whole sector is characterized by major operating leverage (ie fixed cost). When product demand moves down results are magnified by the wonder of leverage. It hurts going down but feels real nice on the way up. No analyst I have read or heard adequately reflects leverage in their analysis. They systematically underestimate the negative drag of declined sales as well as the positive bounce of increased demand. Because of leverage a 20% sales increase could easily triple earnings. If the PE also adjusted back to a market level of 20-25, this stock could move back into 40's. Admittedly optimistic but it happens sometimes. With demand for stuff apparently on the rise we could be getting ready for an exhilarating ride........or it could go back to 7.
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