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Technology Stocks : Echelon Corporation (ELON) -- Ignore unavailable to you. Want to Upgrade?

To: spiral3 who wrote (1753)	4/6/2000 1:45:00 PM
From: hueyone	Respond to of 3076

Spiral, Thanks for all the links in your reply. I look forward to reading them. It is great to get a reply full of information. I will reply to your post in more detail as soon as I have time. Regards, Huey

To: spiral3 who wrote (1753)	4/7/2000 2:55:00 PM
From: hueyone	Read Replies (3) \| Respond to of 3076

Good afternoon Spiral, re: zero underlying strength in the income statement and balance sheet---a gross misstatement? IMHO, it is not a gross misstatement to say that a company that has has less than zero earnings for eleven straight years has shown zero strength in the income statements. However, your statement recognizing declining losses is correct. Regarding the balance sheet, I should have said that ELON's balance sheet is weak relative to ELON's current 2.1 billion market capitalization. Since ELON has never had any retained earnings to add to equity, equity is low. In addition, book value per share, admittedly no longer a popular valuation measure, is only $1.01 per share. Here is a link to a large number of ratios comparing ELON and other high tech companies in its sector: yahoo.marketguide.com You can see that in nearly every comparison, ELON fares extremely poorly. In your last post, you uncovered some of the rare bright spots---low debt, decent interest rate coverage and a good current ratio. What really jumps out at me and concerns me, however, is ELON's monster PSR of 54.21 relative to an actual TTM YOY growth rate of only 23.9%. In a brief survey of companies from my personal G&K watch list, I was only able to find two companies with a lower TTM YOY revenue growth rate---Intel, a mature Gorilla that also has a much lower PSR of 15.58, and QCOM, a certified Gorilla by all accounts ready for explosive revenue growth. QCOM also has a much lower PSR of 26. Also by comparison, WIND, an acknowledged gorilla candidate in a space directly tied to ELON's space, has a TTM YOY revenue growth rate of 30.69%, is profitable, has been forthcoming with guidance to promise a minimum 35% revenue growth next year, yet has a far more reasonable PSR than ELON's PSR---9.45 versus 54.21. Many of the other companies I looked at were already in hypergrowth tornadoes (or had already experienced them), were significantly profitable, yet still sported PSRs lower than ELON's 54.21. In conclusion, by any measure you can find, ELON is already priced at a level that implies remarkable current performance, but this remarkable current performance simply is not there. IMO, the kind of company performance that could justify this stock price is still a long ways off. On the other hand, if ELON goes on to become the Gorilla in this space, which it certainly has a chance to do, the price you pay today will probably eventually be worth it. Thanks for the links and I see there is another news release involving GE today. ELON's stock price continues to run away from me. Some day I may be posting here as a long, but for all the reasons stated in this post and my previous ones, the stock is too pricey for me at this level. Best to all, Huey P.S. More food for thought: If ELON makes the .19 cents per share next year you mentioned in your post, and, the stock price does nothing between now and then, ELON will be selling at a 334 trailing PE at that time. P.S.S. Please give me a chance to catch up on the ELON news releases. Glad you are having a good day.