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Technology Stocks : Gateway (GTW)
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To: Skeeter Bug who wrote (6956)1/1/1999 9:35:00 AM
From: Kory  Read Replies (1) of 8002
 
The most ridiculous statement I have ever read on SI (post by Skeeter):

<what was their high q in 1995? 1996? if you take that q, assuming it isn't higher than this q, the growth rate is negligable. >

That is absolutely brilliant. Skeeter - let me help you on basic math for a second. If you assume that that quarter is not higher than this quarter, the growth rate is negative by definition.

You know, I just realized something. If I assume that Microsoft made less in 1998 than they did in 1993, they too have negative growth. WOW - this is enlightenment.

Oops - just found the flaw in your theory. GTW will NOT have lower earnings in 1998 than in 1995 or 1996. For your benefit, here are the results:

1994 EPS: $0.61
1995 EPS: $1.09
1996 EPS: $1.60
1997 EPS: $0.70
1998 EPS: $1.37 + fourth quarter

If you assume that GTW makes $.70 in the fourth quarter, they will have a compounded growth rate of 14% from 1996 levels or a 24% from 1995 levels.

If you assume that GTW only makes $.65 in Q4, then they still have a 12% growth level from 1996 or a 23% growth level from 1995.

The only way that GTW could possibly have "negligible growth" in 1998 is if they report less than $0.23 in 4th quarter earnings. If this is what you are counting on, feel free to short.

Kory
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