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Technology Stocks : Gateway (GTW)
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To: Ramsey Su who wrote (7090)2/25/1999 1:09:00 PM
From: Greg Jung  Read Replies (1) of 8002
 
Sun 4x cash flow value ie 4x what I would pay for it based on earnings. Maybe $25 is even too high for cash flow with no growth, but its just a figure I pulled out. I imagine its at 60x earnings or better - 15x earnings would be a fair price.

You think technology stocks are not overbought? how do they get so expensive? Now Merrill has reshuffled its PR Line-up to get more m&A biz. Thats got to be worth a few months extension.

The selling capacity for Gateway is already in their cost structure, they don't need to add capacity to sell more. So increased sales flow with a positive to the bottom line. I'm implying that the phone operators are sitting on their hands some proportion of the time, they have adequate parts flow and if you call you will get your machine on schedule. With all the country stores I'm sure most of the salespeople are sitting on their hands much of the day. Wherever they've hidden the cost, it won't be found for a while yet.

Greg
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