Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Iris Shih who wrote (22786)	8/14/1999 2:45:00 PM
From: d. alexander	Respond to of 68573

What do you think about rhat fundamentally? FWIW - d. from BRIEFING.com 990813 Red Hat (RHAT) 86 1/2 +13 7/8 : Maybe Red Flag would be a better name. The hot Linux software IPO now carries a market capitalization of $5.7 billion, on revenues of just $10 million, with a loss of just $130,000. No question that Red Hat will be a successful business, but what about the stock? The IPO chart looks more like an IPO from mid 1998 than mid 1999. Frankly, it also looks a lot like the very common high spike pattern of companies that get captured by daytraders, with a short intense high volume runup followed by a slow decline on dwindling volume before a longer term value is reached. We aren't that excited about the long term future of Linux, actually, except as a niche market success. Linux is simply too complicated to enter the consumer market, too risky for larger enterprises to bank on, and too application-poor for a small business to pick. So where does it prosper? Linux probably has a good future as an operating system for network servers and web servers, where a dedicated IT professional can deal with the complexities. But as a segment of the computer market, it just isn't going to ever challenge the desktop area. But even if we are wrong about this market projection, buying Red Hat stock now because you believe Linux will topple the Microsoft empire is just far too risky. Investors should always consider the possible downside when they invest. No one is ever right all the time. With Red Hat, strong powerful growth over the next couple years could easily justify a $2 billion market capitalization. If it reached $100 million in sales over two years, this would still be a solid Price/Sales ratio of 20, very high in the software area. But even that would mean a stock price of $30, two-thirds lower than today's value! And that's if all goes well! In order to go up from here, it has to exceed even the highest expectations of the most impassioned Linux believers. What is happening now is the daytrading fever of the next "hot" stock. Volume is almost 5 million just one hour into trading, the float is 6.8 million. If you really want Red Hat as a Linux bet for the long term, Briefing.com thinks you will get a much better price point for entry later on, in a month or so. For now, it is daytraders only, and the short side is fast becoming the better bet, but try finding shares to short. For everyone else, non-daytraders and non-Linux believers, it is just another chart to look at, and say "What a crazy market." -

To: Iris Shih who wrote (22786)	8/20/1999 11:38:00 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 68573

Iris, Does this change you views of continued strength in the semi-eqip stocks into the fall? ************************ 09:10 ET Book-To-Bill : Semiconductor Equipment book-to-bill ratio posted at 1.11, down from June's 1.21 and May's 1.24. Slowing trend was confirmed by Applied Material's (AMAT)weaker-than-expected backlog. Wall Street analysts on the horn this morning warning that book-to-bill should continue to slow over next few months. Seeing very little reaction in leading names such as AMAT and Novellus (NVLS). Both stocks flat, in 3rd-market trading.