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Technology Stocks : Corning Incorporated (GLW) -- Ignore unavailable to you. Want to Upgrade?

To: jack bittner who wrote (630)	6/30/2000 8:21:26 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 2260

Jack, looking at last quarter's numbers is getting warmer. But to continue with that theme, what about this quarter's numbers. SDLI has preannounced a sequential increase of 58% on EPS. That translates to 35 cents, based on 22 last quarter. I see NT's estimated at 15 cents (maybe you have a different figure, but I doubt it is as high as 35). Looking out to FY01, I believe SDL can do over $3.20 per share. That implies a forward multiple of 87. I think you said NT has a forward multiple of 50, which I grant is lower, but it is nowhere near the order of magnitude you mentioned earlier. (Note that my estimate for SDL's FY01 is not based on published figures, which I consider ridiculously lowballed. In fact, one of the themes I harp on is that for a company growing as fast as SDLI, the estimates will always be lowballed because mgmt. and analysts are too conservative to forecast a realistic trend that far out. A blatant example of the lowballing is the current q's consensus estimate of .29, when in fact mgmt. has already handed them a figure of .35 on a silver platter [by preannouncing 58% sequential EPS growth]). and that has the resources to finance that construction for the carrier While this certainly allows NT to go after very large projects, it also alters their capital structure considerably. Being in the financing business is not the same as being in the technology business. This creates a different set of risks for the investor, and lowers the aggregate PE. only components (which evidently only I fear may be commoditized by such as furukawa I cannot really speak for five years from now--the time frame you have mentioned. I'm not sure anyone can. Certainly a lot of money is going into the component sector, and there should be some separation of wheat from chaff. But I somehow don't think the world will end so quickly. I believe a cutting edge will continue to be there, with high barriers to entry. If you take your argument about commoditization to the logical extreme, then the entire telecom equipment business is in danger--not just component suppliers. Why? If components are just commodities, then systems will become commodities, too (after all). And then you are left saying NT is the best because of its financing prowess. Meaning it is a bank and not a high-tech firm. I don't think I have to tell you what the PE's of banks look like. My point is not that NT is a bad investment. For all I know, it is a very good investment, and I know NT is considered to have some of the most cutting edge optical systems. Rather, my point is that there are many other considerations needed in making a comparison between a co. like NT and one like SDLI--other considerations than the ones you originally mentioned. I really believe they are different types of companies, and an apples-to-apples comparison is not appropriate. W/r/t SDLI, the comparison I favor is that with JDSU. I see SDLI continuing to outpace on earnings and sales momentum, even as JDSU carries a heftier forward multiple (an amazing multiple, really, given its gigantic market cap). For a variety of reasons, I have considered SDL a better investment than JDSU, but I have never thought to compare it to NT. (I don't want to get too sidetracked by SDL/JDSU here [this is the GLW thread after all!], but for my thoughts on SDL/JDSU, see Message 13804625. the only firm that matches the centrality of nt is glw Irony of ironies may strike here.