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Technology Stocks : USRX
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To: David Lawrence who wrote (12674)2/22/1997 12:59:00 PM
From: hitesh puri   of 18024
 
David,

We have on numerous occassions before have wondered how come we dont
get paid for this second job we do in analyzing these stocks and their
tremendous potential based upon their technical innovations ? Why do
these supposedly idiotic, inept and under educated "analysts" get paid
millions to make incorrect, stupid and sometimes very obvious comments
to guide their equally inefficient money managers running the funds
of their institutions ?
Heres my take : Take a look at the workforce of any industry and you
will see equally idiotic morons running the show because some x years ago
they did well and are expected to do so in the future. Unfortunatle
there jobs are high profile and affect all of us. These dudes
apply the same fundamentals from a bygone era to todays economic
picture being formed with a new tool : technology. What else can
explain these wild swings (reflecting wild swings in sentiments) in
the tech stocks except confusion and incorrect future predictions
because of lack of uderstanding of the company and the industry trends.

Last week I had the opportunity to meet a money manager and former analyst
of the Franklin Templeton group at a high tech stock seminar. I talked
at length with him after his talk (he was very considerate and responsive)
regarding networking companies and their stocks. Being involved in the
information systems group of his institution he has a much better insight
into these companies from the technology point of view. But being
an analyst and fund manager he also takes an unbiased and emotionless
view of their stocks. Here are few points I gathered from him :

These guys give a shit about future potential if it does not translate
into earnings. Specifically to USRX he dumped their stock the next day
after their earnings mainly because of their high DSO and drop in system
sales. I pointed out to him that USR said in their CC that a major
customer pushed orders ahead but he said they dont like if a company is
hostage to such funky customers who are unreliable. These guys are
very wary of more hidden gremlins when one rears his head ( a la COMS).
Thats why we see such dumping gather momentum with a small innocuous comment
of caution from the CEO or CFO.
Secondly since every other fund manager is looking at these key things
nobody wants to play hero and go against the grain. So, if there is
a blowout quarter then the stock does well if it has not reached high
levels already due to anticipation and if the quarter is so-so with
future uncertainty then be ready for a dive.
They want proof and they have lot of money (which isnt theirs) to
punish the company via their stock if the company is being naughty.
He cited similar reasons for CSCC and COMS. He also said he would
consider USRX under 54.

It is going to take a while before some tech companies are accepted
as major forces in our lives and ups and downs in their operations
are not held against them. Till then dont margin out on their stocks
they can be very nasty for no good reason.

-hitesh
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