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Technology Stocks : EDS - Recent pullback a buy opportunity???
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To: Daniel Liberty who wrote (1353)2/5/1999 8:07:00 PM
From: Dave O.  Read Replies (2) of 1841
 
Dan,

Here's my thoughts. In the early days GM was great for EDS, explosive growth, very generous margins and a monster customer. Now that "monster" is coming back to haunt EDS to some degree. GM revenues are expected to decline 7-10% in 1999 and margins have been getting squeezed as well. And GM is still such a big chunk of overall business. And with concensus estimates at $2.22 it's trading at a P/E of 22. The 9% growth (if you include the Xerox disputed $200 million) won't likely be able to support that kind of multiple. Also, I saw that operating margins in Q4 declined from 11.1% to 8.9%. Last, the stock has been on a tear ... I think it was around 36 when they announced Brown as the new CEO.

Dave
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