3Com Corporation (COMS) Message Board

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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

0.0%

Nov 7 11:47 AM EST

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To: Techplayer who wrote (28539)	3/2/1999 8:53:00 PM
From: Tim McGee	Read Replies (1) of 45548

Looking forward... I for one am glad that 3Com mgmt came out and said something today. It is much better to know this disappointing story now than be tossed around by the unknown fear that has be present the last month or so. It is reasonable that they got the word out as soon as they were sure of the exact numbers. However, it is not credible that they have such a poor handle on their revenue situation that they could not warn last week - especially when they indicate results might be near estimates if a bit low. Obviously they blew it big time here. The channel - which they claim as a strength - has turned out to be the area where information was bad. The patience is out with this management. But the long term story can still be positive. We are still sitting on a pretty good value. This FY will be somewhere near 5.5B in revenue and the market cap currently near 9B. We're getting pretty close to intrinsic value of the company. Multiples remain low. On current earnings for this year 1Q .24 2Q .36 3Q .23 4Q .37E (my own estimated cut from current First Call .41c) FY 1.20 A PE of 25 yields a stock price of $30 for FY99. 35 PE = $42. So we should be able to trade in that range as soon as evidence appears that this qtr has not inflicted longer term damage. Taking a conservative view on FY00 est of 1.80 (current First Call is 1.90 - 2.00), a forward PE of 25 yields a $45 stock and a PE of 35 yields a $63 stock. IF things are really ok going forward at 3Com, we are looking at a situation where will be able to get a $30, $45 or $60 stock for the low 20s. COMS will most likely trade lower as most investors will want to avoid the risk that even the above numbers won't be reached. As time goes by, we should be more accurately be able to know which of the price ranges above is right for COMS - it will almost certainly be higher than what we'll see in the next few weeks. Tim

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