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Technology Stocks : Egghead Computer (EGGS)
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To: Smart Investor who wrote (7016)3/8/1999 7:18:00 PM
From: Sgt. Stockpile  Read Replies (3) of 8307
 
I would NOT hold EGGS long term. Here's why: The reason EGGS tanked last quarter was because the market compared Egghead.com to Egghead. A year ago last quarter, EGGS was still brick and mortar and generated $99 million in revenue. The market compared that to last quarters's $44 million in pure e-tail. This spelled disaster. It did not realize that continuing operations a year ago was virtually nil compared to $44 million last quarter.

This comparison is what doomed EGGS to failure last quarter and I believe the same will happen this quarter because a year ago, EGGS was STILL BRICK AND MORTAR. Eggs offically closed up shop on all stores February 1998. I believe one year ago (1Q 98), EGGS had a $74.5 million quarter. There is NO WAY (IMO) they will make this this quarter. So revenues will definetely be lower. Regarding loss per share is another question. This is because EGGS took a HUGE CHARGE 1 year ago (I believe it was $1.65/share). Knowing the market, they'll say, EGGS made $75 million last quarter and only $50 million this quarter, but when it comes to loss/share they'll ignore the difference between ($1.65) last year and the approx. (.30) this year saying "they were in the process of closing down their stores.

But, technicals look VERY GOOD for EGGS today. It bounced off a lower support hard. I believe the secondary offering is scheduled for Thursday, too. Get in, and GET OUT.

Voluntary disclosure: I hold no position in EGGS.
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