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Technology Stocks : The New QLogic (ANCR)

QLGC 16.07

0.0%

Aug 24 5:00 PM EST

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To: Neil S who wrote (21035)	3/7/1999 9:57:00 AM
From: Nine_USA	Read Replies (1) of 29386

Neil, These are positive numbers for FC switch companies. Using EMF associates assumptions: Net 1999 revenues to switch companies = 4.8b x 4% x 1/2 = 96m Net 2003 revenues to switch companies = 23.1b x 14% x 1/2 = 1.617b Net FC revenues of 96m to 1.617b in 4 years is a cagr of 103% IF ANCR get 1/3, then 2003 ANCR sales = 1.617b / 3 = 539m IF ANCR converts 10% of sales to after tax earnings and there is stock dilution of 40% from here, then 2003 ANCR eps = 539m x .10 x .60 / 25m = $1.29 A 10% after tax margin is at least plausible as EMC is 18% and SUNW is 8%. An end of year 2003 stock price for ANCR using 40 times trailing EPS of $1.29 could be conservative where revenues have been compounding at 100% for 4 years. 40 times $1.29 would project ANCR to $51.6 for DEC 2003. $5.625 going to 51.6 in 4 3/4 years is a 58.8% compound return For a stock with ANCR's history of price volatility and performance delays and disappointments, a plausible compound return of 35% is my personal threshold. A 35% return to an ANCR $51.6 price at end of year 2003, implies a current price of $12.30. I am guessing that many ANCR bulls would put the current value for ANCR pretty close to this number.

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