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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Bruce Brown who wrote (20351)	3/16/2000 6:58:00 PM
From: ggamer	Read Replies (3) \| Respond to of 54805

RE:JDSU 1) The market for the fiber optic sector is going through the roof. 2) Last quarter LU announced that they can not meet demand for the sector. 3) Today Corning says that they can not meet demand. 4) JDSU has been saying the same thing for months. 5) JDSU is getting bigger and bigger. 6) The broadband story is just beginning. 7) The thread still thinks that JDSU is a king even though the author of the manual has crowned the company a gorilla. 8) I know FM was late with crowning QCOM a gorilla but do you all really think that he is wrong again by calling JDSU a gorilla. 9) Are we looking at this company closer than we should? 10) For us all non-tech people in this thread, can someone in one sentence tell us why this company is not a gorilla. 11) Shouldn't we all take more risk with this company? 12) If this company has been crowned a king (gorilla?) than why are the founding fathers of this thread paying more attention and investing in smaller potential gorillas of tomorrow like CREE, ELON, GMST, SEBL, and CITX. Here is a commentary from today's briefing.com: etrade.com 08:40 ET ****** Corning (GLW) 170 1/4: We'll call this today's lesson in valuation analysis. As of last night, Corning's P/E ratio on 2000 earnings was 72. The one-time glass-works trading at 72 times earnings!? Crazy, right? This morning's news shows the dangers of assuming that the "E" in a forward P/E ratio is accurate. Corning issued a positive preannouncement, indicating that Q1 earnings will be in the $0.53-0.55 range relative to the current First Call estimate of $0.48. That's a 10-15% improvement. Apply that to the full year's earnings estimate and suddenly the P/E is down to 63. Apply the improved growth to next year's estimate, and we're down to 51. The reality is that a forward P/E is only as good as the E, and sometimes the E isn't so good. In the fiber optic industry that is particularly true, as sell-side analysts' intentionally low-balled estimates are not keeping pace with growth in the sector. Corning, which Briefing.com has highlighted on several occasions as a relatively cheap fiber optic play, said this morning that the earnings surprise was due to demand for the company's LEAF optical fiber. We're not talking about new photonic switches or the erbium-doped amplifiers, this is the actual fiber. And not surprisingly, demand for that fiber is booming. LEAF fiber is used for networks greater than 50km in length and allows for maximum DWDM capabilities; it has been deployed by such companies as AT&T, Williams Communications, Level 3, and Cable & Wireless. The first indication we had that demand for fiber optic products was exceeding market expectations was, ironically, the Lucent (LU) warning back in January. In that warning, Lucent noted that it had been unable to meet demand for its higher end DWDM products. With this GLW preannouncement, we see more of the same: demand for the latest, greatest fiber optic technology is booming. This is good news for the entire industry. If demand for the actual fiber is exceeding expectations, then it is safe to assume that the DWDM equipment sold by Lucent (LU), Nortel (NT), Cisco (CSCO), and Ciena (CIEN) is strong; that the amplifiers sold by Corning, JDS Uniphase (JDSU), and SDL (SDLI) are strong, that the long haul transport equipment sold by Qtera (part of NT) and privately held Corvis are strong; that the photonic switches either being sold or under development at Sycamore, Agilent, and Xros (part of NT) are strong. In short, there are a lot of "E"s out there that are too low. Yes, the forward P/Es are extreme, but the question is, how good is the E? For Corning it was too low. It's probably too low for most of the fiber industry. - GJ