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

To: Apollo who wrote (29813)	8/11/2000 9:23:49 AM
From: LindyBill	Read Replies (1) \| Respond to of 54805

JDSU/SDLI... older hands here on SI are speculating that the fiberoptics companies are way overpriced, and the balloon will soon rupture, in the same way air came out of Qualcomm this year. The fiber optics are expensive, because Mr. Market sees the enormous growth in them the next 4 years. Everything is overpriced when it falls, but there has to be a reason for JDSU to fall, not just opinion from Bears. We can't really say if SDLI is overpriced, because its price now is a function of JDSU's price. SDLI is up, according to the chart I pulled up, over 7500%! the last two years. Qualcomm's price fell, IMO, because it did not meet investors anticipation of early market dominance, and uncertainty over the strength of their patents. For JDSU to fall, say 35% to 50%, which is what your optic Bears are predicting, would take, IMO, some bad news on sales and profits. Can you see any bad news on sales and profits coming for JDSU? I can't. Nothing is sure, of course, and, as William Goldman, the writer for the Movies, became famous for saying: NOBODY KNOWS!

To: Apollo who wrote (29813)	8/11/2000 9:48:10 AM
From: Mike Buckley	Respond to of 54805

Stan, Qcom didn't seem so overpriced to me at $150 or $170 when the fundamentals were unchanged, with the evidence that CDMA was still growing, Actually, the fundamentals were getting better and they've continued to do so since that time. The most difficult time to value a stock is when the fundies are changing, whether for the good or the worse. That's because the quantitative fundamentals we predict far into the future such as earnings are mostly driven in the here and now by issues that are mostly qualitative (such as increasing demand, future products in the pipeline, etc.). I was uncertain back then about Qualcomm's short-term valuation due to the difficulty of assessing changing fundamentals. That's why I bought some stock for a child when the price slipped "back" to $133. I knew at the time I might be very wrong about it being way too high, but amidst changing fundamentals I also knew that it might never be at such a low price. On the one hand, the comforting aspect of all that is thinking that over the long term the stock will be much, much higher yet no one ever plans on buying a stock that will be 50% lower within months. It's simply part of long-term investing that we shouldn't agonize over emotionally. with a price target of $250 being placed on it. Most of us don't pay any attention to analysts' numbers. You probably remember that when most of us began following the company and the stock intently in March and April of last year that we went to great lengths explaining the factors that made the analysts feel comfortable underestimating year-forward earnings. There's a tendency that though we ignore analysts when their expectations are low that we sometimes pay attention to them when they are high. Not good. I'm not suggesting that you did that and mention it for the benefit of the folks here who are less experienced at this stuff than you. Was Q overpriced then........or is it underpriced now? If it's still overpriced it's not nearly as overpriced as it was in January. :) Seriously, the fundamentals continue to change so rapidly that it remains very difficult to determine fair value. I think it was a few months ago that I figured that a price of $50 would cause me to think that it was on the edge of becoming a traditional value play. That was before the Spinco announcement. Now some analysts are telling us that once the value of Spinco is fully realized we are essentially getting that part of the company for free at current pricing of Q's stock. In context of my above comments about analysts, it's something worth considering but I don't have an opinion about it not being an analyst myself. Certainly the market doesn't see it that way. Otherwise the Q's stock would be a lot higher, huh. --Mike Buckley

To: Apollo who wrote (29813)	8/11/2000 1:49:17 PM
From: StockHawk	Read Replies (3) \| Respond to of 54805

>>some of the older hands here on SI are speculating that the fiberoptics companies are way overpriced, and the balloon will soon rupture, in the same way air came out of Qualcomm this year...How can we distinguish between [whether]JDSU/SDLI will continue to climb, versus determining when a Q is overpriced?<< I too have been wondering about the valuation of JDSU, which I own. A comparison with QCOM seems inevitable. Of course there are many differences. JDSU's growth is incredible, albeit assisted by acquisitions; while QCOM was doing divestitures. QCOM is in battles over standards. Q is a Gorilla, J is a King. Q has patent protection. But ignoring the differences for a moment lets take a peak at market caps. After the Sept. 99 quarter QCOM had trailing four quarter sales of $3.94 Billion and a market cap of approximately 104 Billion on say 12/29/99 or 1/25/00 (closing price of $140). At those times the stock was selling for 26 times sales. On 1/3/00, the day of the all-time closing high of $174 the cap reached 130B, which was 33 times sales. For the most recent 4 quarters JDSU has reported revenue of $1.43 Billion. With today's market cap of $92B that puts them at 64 times trailing sales. (please check my math) JDSU looked like it was falling when the S&P 500 "saved" it. Lindy asks "what could go wrong?" With a company doing serial acquisitions, running at screaming growth rates? How many companies have been derailed by one too many acquisitions?, and who ever heard of a company faltering because they could not keep up with sales? I'm not suggesting that anyone sell JDSU, but I think its valuation is an important issue that should be discuss further here. And as for SDLI, arb plays are some of the most risky around. Sure people made money on ETEK or TV Guide but what about MCI/Sprint or Tellabs/Ciena. StockHawk

To: Apollo who wrote (29813)	8/11/2000 2:52:43 PM
From: ratan lal	Respond to of 54805

As a non-tech amateur investor, Qcom didn't seem so overpriced to me at $150 or $170 when the fundamentals were unchanged, with the evidence that CDMA was still growing, and with a price target of $250 being placed on it. Was Q overpriced then........or is it underpriced now? I have a strong suspicion that the price then was due to China and Korea. SInce both those countries made statements confusing the issue, QCOM dropped and will not recover till the issues are clear in everyone's mind. Or 3G is implemented all over the world using CDMA.