Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Techplayer who wrote (950)	10/13/2000 1:07:39 AM
From: Asymmetric	Respond to of 2260

Post From Yahoo Board: messages.yahoo.com Corning (GLW) 83 1/8: We didn't have to wait long to get confirmation that Lucent's woes in the optical sector are not shared by other optical players. Just two days after Lucent warned for the third time this year, Corning issued an upside preannouncement for the fourth time this year. After the first preannouncement back on March 16, we called Corning's news a lesson in valuation analysis, as it revealed that making investment decisions isn't about deciding whether a P/E ratio is too high or low, it's about figuring out where that E is headed. E is, after all, just an earnings estimate, and estimates are made to be changed. Lucent's have been on a steady slide, yet Corning's have been continually rising. A high P/E early this year was therefore misleading, as it was based on an excessively pessimistic E. At that time, GLW's 2000 earnings estimate was $0.79 (split adjusted) and its P/E was 72. With today's announcement, Corning's full year estimate is now $1.15- 1.17. So the P/E back in March should have been a much more reasonable 49 had the estimates been correct. On the surface, Lucent looked to be the "cheaper" investment at the time, but that's only because its earnings estimates were too high and Corning's too low. Aside from the valuation lesson, Corning's preannouncement this morning had something to say about the fiber optics market. In guiding Q3 estimates up to $0.34-0.35 from $0.30, Corning cited strength in sales of fiber and cable, as well as optical modules and components. Strength in fiber sales won't help many other stocks, as there are few pure-play manufacturers of the actual cable (as opposed to components and systems). But strength in components does suggest that this sector remains robust, which is good news for competitors JDS Uniphase (JDSU), SDL (SDLI), New Focus (NUFO), and Oplink (OPLK). It also suggests that, unlike Lucent, Corning is executing well in the face of a strong optical market. Its valuation remains high, particularly with the 7 points it is tacking on pre-market, but remember -- that P/E is only as good as the E. We have been writing that the optical sector is in for some rough times due to excessive valuations and troubles with telecom service providers. Corning is not immune to those troubles, but its ability to consistently beat estimates this year certainly suggests that it is one to favor in the long term. -