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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Hagar who wrote (7640)	10/25/2000 5:48:13 PM
From: Warren Gates	Read Replies (1) \| Respond to of 14638

The market always over-reacts on the high end and the low end, but at the end, the market is always right. What would be a fair price for Nortel anyway. The market will decide on that. It's all about perception. Right now, the market sees a slowdown on telecom equipment spending. It's just starting to digest this possibility. The trick is to know when the market has fully digested this. Sometime in the next few months, this telecom cap spending slowdown will be confirmed. It's impact on the telecom equipment bottom lines will be confirmed. How NT and the rest react to this will determine if the market has already priced this into the stock. There was a time when NT would report 50 cents in a quarter and the stock was at $50. This assumes some kind of a PE of 25X current earnings. Now, 18 cents was reported and stock is at 45. This assumes some kind of PE of 60X current earnings. We've come a long way. Perhaps the market is trying to go back to those days when PE's equal growth rates. If you would notice, a lot of semiconductor stocks now are at this level. All I know is the market has shot down the wireless stocks, most semiconductors, most e-commerce stocks, the dot-coms are R,I,P. The momo stocks are starting to deteriorate. The last ones standing are the storage stocks. I believe the market hits bottom when EMC hits its 200 day moving average.