SD: Did you say 'kind of hard to justify current P/E'? Well then this should interest you,I hope.<g>
From the same Fool interview the CEO NETAP,Dale of course is the Fool,the other one as you know is the CEO of NTAP
=====================
Dale: I run a value portfolio here at the Fool and the largest holding is Cisco, and lots of value investors would stay away from that.
Warmenhoven: Yeah, the P/Es are too high, right?
Dale: Yeah.
Warmenhoven: In fact, that's an issue for us.... one of the big issues for investors interested in getting into this area will say, "Gee, you multiples are too high." And I'll say, "Compare us to some of the other companies and I'm not so sure. Plus look at how the stock has performed over the last two or three years. The multiple's always been too high."
In fact, I had a meeting with a major portfolio manager and we had met with him a year prior and he took out his notes from a year ago and he said, yeah you did this, you did that exact change with the product line, introduced this feature, you did this deal, etc. And he takes out his calculator and starts punching some numbers all of a sudden. Our CFO looks at him and says, "What are you doing, calculating the money you didn't make by not buying a year ago." And he said, "Yeah, absolutely." It turns out they're now are a big investor.
The question is not "Is the multiple at the moment high?" It's a question of "Do you think the stock has appreciation potential?" I think we're a high growth company. I personally believe we have the opportunity to be the next Cisco. I think we can create a market segment called data storage appliances, and I think we can be a leader in it. I think we can dominate that segment.
Dale: One of the biggest hang-ups I have is so-called value investors out there who like Bethlehem Steel at 12 times earnings where the target market is growing at 2-3% per year, but they don't like markets where something is selling at 80 times earnings and growing 30 times faster. It's exponential growth that people have trouble with. ...... |
