These are basic some issues I would like you to work around, needs more investigation like technical and others but would give you good platform to work on.. Know about this Moores Law and Metcalfe's law thoroughly.
<<These days, many well-known food stocks are trading at or near multiyear lows-and I'm scooping them into my personal portfolio. One of the best buys at the moment is Sara Lee (NYSE: SLE). The maker of Sara Lee cakes, Hillshire Farms cold cuts and Hanes hosiery is building a head of steam, with earnings for FY 2000 (ends June 30) expected to jump 10%-12% to a new record.
What's more, Sara Lee is energetically buying back its own stock. A few weeks ago, the company wrapped up a $3 billion buyback program announced in the fall of 1997. Now SLE is planning to repurchase another 70 million shares (currently valued at more than $1.2 billion). As the float shrinks, each surviving share owns a bigger piece of the business.
For icing on the cake, SLE throws off a 3% dividend. (The payout has been increased 23 years in a row.) Yet this superbly consistent growth company is selling today for the same price it fetched in early 1997-when Sara Lee's profits were 25% lower, and before the gigantic stock buyback got under way.
Madness? Maybe. Or just plain carelessness. Bargains like this can only occur when investors take their eye off the ball (and chase dot.com pipedreams). >>
<<SmithKline Beecham (NYSE: SBH) is a silver bullet in the human genome area. It's a U.K.-based company with American Depositary Receipts trading on the New York Stock Exchange. Each ADR represents five U.K. shares; just think of them as exactly like any other stock.
A little background: Stocks dealing with the human genome are very hot--it's probably the biggest thing going on in science this decade. Companies have been sequencing genes for years, working out the exact structure of the DNA of each gene. There are about 100,000 human genes, of which about 5,000 are medically relevant. A sequenced gene is like a detailed grid of a town--very handy, but it doesn't tell you how to get from one town to another. For that you need a comprehensive map. About the middle of next year, the human genome will be entirely mapped and we'll know where everything is in relation to everything else. The impact this will have on our health and health care system will be amazing.
Doctors will be able to use this information to screen patients for certain diseases, including top killers like cancer and heart disease. At birth, parents will be able to find out what diseases their children are likely to contract later in life, and modify their lifestyle and medical treatment appropriately. Consider the example of congenital glaucoma. If the first sign of this disease is dimming sight around age 11, which is typical, it is too late to operate and the child will go blind. However, if this gene can be detected at birth, the tear ducts can be opened while they're soft, and the child's vision can be saved. The human genome map will make miracle cures like this possible.
Which brings us to SmithKline Beecham--the little-recognized human genome play. The stock was around $71 early in November and closed the year in the low $60s! Wall Street thinks it's a typical big pharma, with not a lot of new drugs coming along and some others coming off patent. Jan Leschly, who's run the company since 1994, will resign in April, six months before his original date, when he turns 60. The line of succession is all set, but Wall Street wants to see the new CEO in action before buying. Last year SmithKline held merger talks with both American Home Products and Glaxo, but nothing came of them. Pretty boring.
SmithKline Owns the Rights to All Those Genes
Except there's one minor thing Wall Street forgot. When Human Genome Sciences was founded, their first deal was a monster: a $125 million funding from--SmithKline! As part of the deal, SBH got to cherry-pick the genes that HGSI developed and has numerous drug development programs under way. The gene-based drugs that SBH is working on target the chronic diseases of aging that have been so resistant to chemically-based drugs. It is these chronic diseases--cancer, heart disease, diabetes, macular degeneration, arthritis, asthma, osteoporosis and others--that are so brutally expensive to the health care system.
The five-year compound growth rate of revenues is only 7.5%, but that is biased low due to the sale of a large division in 1999. Looking forward, I expect SBH to hit my 15% minimum revenue growth target for a Great Growth Flow company. Paxil, an antidepressant, and Augmentin, a broad spectrum antibiotic, are the company's big producers. Avandia, a diabetes drug launched in he U.S. and Mexico, should get European approval in 2000 after a disappointing delay in 1999, and will further boost the bottom line.
Research and development spending as a percentage of sales runs around 10.5%, well over my 7% minimum. Pre-tax profit margins average 22.5%. That's typically high for a pharmaceutical company and far over the 15% we look for.
In the most recent quarter, SBH earned 44¢ an ADR, matching Wall Street's estimates. The company should do about 55¢ in the current quarter, bringing them in at $1.88 for the fiscal year on $13 billion in sales. In the 2000 year they should earn $2.25 a share, plus or minus 5¢, on $15 billion in sales. >>
<<Wealth Awaits Those Who Invest in the Still-New Tech Revolution
By Michael Murphy
Editor, Technology Investing
January 28, 2000
New technologies, such as the Internet, email, and wireless telecommunications, have dramatically changed the way we live, work, and play in recent years. But do you ever wonder what's in store three, five or even 20 years down the road? My search for dominant technology companies that we can profit from often leads me down this path. Today I'd like to tell you my thoughts on where technology will lead us in the years to come--and how you can use this information to rack up some tremendous investment returns. Fasten your seatbelt; we're in for a wild ride.
Today's $4,000 server has the neural processing power of a dragonfly. In 2002 that same level of computing power will cost less than $1,000. Today's $1,000 full-featured multimedia PC will cost under $250, and may be disguised as a cable TV set-top box or a luxury car stereo. In a car it will save some current costs by taking on many of the functions performed today by separate microcontrollers: braking, fuel/air mixing, air bag deployment, global positioning system and cellular telephone. In addition, of course, it will be connected to the Internet for maps, driving instructions, suggested restaurant and hotel stops, and any other data or computation you want. No mouse or keyboard required. You'll talk to it.
All of this will be driven by Moore's law that the number of transistors in a given area doubles every 18 months, which means the cost per transistor falls in half. It's the semiconductor equipment companies that have to implement Moore's law, and they all tell me they can keep up the pace for several years.
In electronics, Moore's law holds the key to how long the technology revolution continues. That PC that will have the neuronal intelligence of a dragonfly in 2002 will evolve to the level of a mouse by 2010. However, if the rate of increase in the cost of making chips continues at its current pace, it will become economically impossible to drive Moore's law any further. Because this is widely recognized in the industry, I am convinced these economic barriers will be overcome.
That will allow another huge evolutionary jump to 2018, when a mere $1,000 PC will have the neuronal intelligence of a human. Pretty scary. That's also the point at which we hit the physical limit of moving electrons around the surface of silicon--which means that we won't be able to cram any more lines on a chip because all the lines will be running into one another and there will be no more space.
But notice that I said "surface." The physical limitation is in two dimensions. If chip designers can move into 3D design and manufacturing--don't try this at home--Moore's law could be extended for many years. By 2028, the $1,000 PC would have the intelligence of a small village of, say, a thousand people. By 2048 it would have the intelligence of the entire planet--probably 10 billion people at that time. The issue then becomes whether the PC serves us or whether we were simply an evolutionary step in the development of silicon life forms that will rule the earth!
If 2010, 2018 and 2028 seem a long way away to you, let's talk about that other great driver of the technology economy: DNA. The human genome should be completely sequenced by the middle of next year. Currently, genes are sequenced one by one. It's like having a detailed map of Paris, Chicago and Half Moon Bay--very useful as far as it goes, but with no information on how to get from one place to the other. The Human Genome Project is mapping the whole genome by sequencing it from one end to the other. At the end of 2001 we'll have the map that tells us where everything is in relation to everything else. This is very important because most diseases are multigenic--more than one gene is involved. Even diseases where we have identified a causal gene, like breast cancer, don't hit everyone who has that gene and sometimes hit other people who don't have the gene. Why? The Genome Map should give us a clue.
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As you can see, this massive technology revolution we are living through is going to continue for many, many years to come. And smart investors who are tapped into the industry are going to make a killing in the months and years ahead. >>
<<Mid-Year Technology Review: The Revolution Rolls On (cont.)
By Michael Murphy
Editor, Technology Investing
July 28, 2000
So let's take a look at a few of the major growth drivers in the hottest technology industries, and I'll show you the best ways to profit from each one.
Communications Revolution
The main driver of the communications revolution is Metcalfe's Law. Metcalfe's Law says that the value of a network goes up by the square of the number of connections. That is, 10 people on a network are "worth" 100, but 20 people on a network are "worth" 400 — four times as much value with only twice as many people. The Internet, the email explosion, business exchanges, message boards — all seem to follow Metcalfe's Law.
The demand for communications services, hardware and components is red-hot. Not only is everyone trying to build up their Internet-related infrastructure, but the national and international telephone systems are being upgraded to handle data and video as well as voice.
Our horse in the components area has just made an important acquisition that will bring communications products to more than 50% of total revenues in the September quarter — and make it their fastest-growing business! Better still — the Street took it down last month with all the semiconductor stocks, and it's currently trading at a bargain-basement price. (Join my Technology Investing service on a risk-free trial basis today, and I'll tell you the name of this company — and my current buy price — as well as fill you in on my top picks in the communications services, hardware and shipment areas.)
The Internet
Internet traffic is still doubling every 100 days, which means it grows 10 times in one year and 1,000 times in three years. That's great evidence of the rapid, radical changes now under way — and the very reason you should increase your investments in technology stocks right now.
I've been careful in the Internet area to focus my readers' attention on profitable companies selling at reasonable valuations. We may someday own the Amazons and Aribas of the world — if they can show us sustained profitability and we can buy them at a reasonable price.
In the meantime, we can make plenty of money without falling into the risky "Internut" trap. My top recommendation — a leader in the very fast-growing online trading business — is not only a safe way to get some Internet sizzle into your portfolio, but it's the absolute cheapest stock I follow. You must buy it. (I'll tell you more about this exciting story when you join Technology Investing on a risk-free trial basis.) >> Don't join but reading all this helps your mind a lot..
I would like you all to go through this stock known as ETH, after Buffet purchase of Jordan this can be in play.. Cobot as you guys must have read has reversed its buy and thinks that itimer is flashing negative as it takes out the 50 days MA. IIX needs a careful look if it holds 471 support that would be good.. |
