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Technology Stocks : SDL, Inc. [Nasdaq: SDLI] -- Ignore unavailable to you. Want to Upgrade?

To: jeff greene who wrote (989)	3/17/2000 2:13:00 PM
From: pat mudge	Respond to of 3951

This came out from Briefing.com yesterday: <<<< 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. >>>>>

To: jeff greene who wrote (989)	3/17/2000 2:22:00 PM
From: pat mudge	Respond to of 3951

From IBES --- I've highlighted the upgraded percentages since the columns are hard to read: Period Ending High (USD1) Mean (USD1) Median (USD1) Low (USD1) #Ests #Ests Up2 #Ests Down2 % Change In Mean3 Coeff. Of Variation Est. P/E LTG (percent) ----- 50.000 39.900 40.000 25.000 10 0 0 -2.249 18.321 --- FY1 12/00 1.520 1.444 1.440 1.370 17 3 0 1.547 2.355 317.8 FY2 12/01 2.100 1.989 2.000 1.870 15 4 0 2.105 3.570 230.7 QTR1 3/00 0.330 0.319 0.320 0.310 16 1 0 0.314 1.567 --- QTR2 6/00 0.360 0.345 0.340 0.330 14 2 0 0.877 2.609 --- QTR3 9/00 0.400 0.373 0.370 0.350 14 2 0 1.084 2.949 --- QTR4 12/00 0.430 0.406 0.410 0.380 14 2 0 1.247 3.448 --- QTR5 3/01 0.470 0.448 0.440 0.440 5 3 0 2.752 2.902 --- QTR6 6/01 0.500 0.488 0.480 0.480 5 2 0 3.171 2.254 --- QTR7 9/01 0.550 0.526 0.520 0.500 5 3 0 3.543 3.612 --- QTR8 12/01 0.600 0.576 0.560 0.560 5 3 0 4.348 3.819 --- 1USD is US Dollar 2Compared to 4 weeks ago 3Over 1 Month