To: Baldwin who wrote (5635 ) 6/14/1999 4:14:00 PM From: DMaA Read Replies (1) | Respond to
Briefing.com:A very interesting change in stocks on the focus list by Donaldson, Lufkin, Jenrette today. Big players Cisco (CSCO) 108 3/4 -1 15/16 and EMC (EMC) 48 7/16 -2 15/16 get dropped, and Sprint PCS and Tellabs (TLAB) 57 1/2 -1 1/4 get added. Although Cisco was dropped because the analyst who follows them left the company, the changes reflect an underlying shift in the hardware side of the technology industry. EMC has become one of the dominant makers of hard disk drives and storage systems, having built itself into a $4 billion company. Cisco, what can you say about it, it has eaten every other network equipment maker's lunch. But while both companies are likely to continue to grow, and increase market share, and stay profitable, the coming next wave belongs to the telecommuncations sector. Sprint PCS is the wireless mobile portion of the Sprint companies, and Tellabs is a manufacturer of voice data and video equipment for telecommunications companies. To really reap rewards in growth stock investing, you need to join the large scale trends before it is clear that the shift has happened. You needed to buy Intel (INTC) in the early 80's and Microsoft (MSFT) in the late 80's, before the real boom happened. And in the 80's the biggest players were minicomputer manufacturers like Digital Equipment (DEC, now CPQ), which seemed incredibly dominant at the time. While Sprint PCS isn't exactly a beginner, with over $1 billion in sales, with large losses, it hasn't been given the kind of high multiples that other players in the space have. Tellabs is a little bit bigger, with $1.7 billion in revenue, but it is profitable. Both should benefit as digital information transmitted wirelessly becomes more prevalent. We aren't sure that DLJ made these changes with this "big picture" shift in mind, but it is representative of it nonetheless.
