You have illustrated yet another example of the downside of companies making promises that they don't/can't keep. The next time they make those promises, shareholders assume, in advance, that the company will similarly miss that deadline and/or estimate. In fact, even if they do make the time/earnings estimate promised, it will usually be greeted by a "Well, it's about time they deliver..."
The MSFT model is the way to go. Always be cautious, warn of potential problems, guide the analysts down on the estimates, set the bar lower, and then blow those estimates away... quarter after quarter after quarter.
BTW, pre-Teik Tatt, FY ending in 1997 and 1998(exing out one quarter of TT), SETO was typically earning around 2 cents a share. This past year, without TT backout costs, they earned around 5 cents a share. That reflects a very healthy increase in their core business growth rate.
The % increase in growth rate is what drives the acceptable P/E that a stock is "allowed", adjusted for the particular sector its in. SETO with a P/E of 10(.50 price with .05 core business EPS) is extremely low given that stocks today typically trade at P/E values of 1.5 to 2 times their growth rate. SETO's growth rate is a little bit more than 10%, don't you think?
TG |
