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Technology Stocks : PSFT - 1999: The "Make-It-or-Break-It" Year?
PSFT 0.00010000.0%Oct 29 5:00 PM EST
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To: Michael Burry who wrote (435)4/6/1999 9:26:00 AM
From: Elmer  Read Replies (1) of 1274
 
Hi Mike,

I appreciate your commentary on PSFT. You may be right that it hits single digits, but I hope not because I'm long. I do wonder, however, why as a value investor, you have focused on this equity as particularly mispriced. For example, PSFT currently has a market capitalization of about $3 billion. If it goes to single digits, it will be capitalized at comparable levels to Vignette, Covad or Healtheon which all just recently went public and are all in internet related businesses. They don't have earnings or significant revenues and, on a comparative basis, make PSFT look like a Graham and Dodd selection. So pointing out the worts on PSFT seems to me somewhat misguided in a financial world where turkeys fly.

Focusing on PSFT's worts, and not the worts for instance of the internet darlings, is easy because the stock has been going down and the industry stinks. It has a self fulfilling quality. But consider that your view of PSFT is shared by the investment universe and has been for a very long time. Almost all analysts have a hold rating on the company. You may be right short term just like the analysts but nothing lasts forever and this won't either.

Pointing out the worts on a stock that has fallen 75% is not wonderful analysis. It's rear view mirror. And if the ERP market ever turns, its bad advice.



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