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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: TwoBear who wrote (1690)	6/30/1999 2:01:00 PM
From: porcupine --''''>	Read Replies (2) \| Respond to of 1722

TwoBear: As you probably know, porc is a big fan of Pairgain. However, savage price competition has slashed the profit margin in selling xDSL "boxes". The reult has been 8 quarters of declining earnings. Therefore, PAIR's spotless balance sheet and past record of cash earnings generation no longer warrant a premium multiple. Nor can PAIR's future prospects as a turnkey hi-bandwidth solutions provider warrant a premium multiple, until it has demostrated that it can execute profitably. Thus, PAIR cannot fit any Graham/Buffett definition of an "investment", however stretched. Hence, it is by definition "speculative". As such, Graham would still approve its purchase -- but only if done in a separate "speculation-only" portfolio. porc --''''>