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

To: Mike Buckley who wrote (36821)	12/20/2000 12:28:12 AM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

What slowing growth? How fast is it slowing? In the top-tier market or the mid-tier market? In licensing revenue or service and maintenance revenue? Is it the slowing growth implied by the article you provided that concerns you? Is the info in the article accurate? One of the great dilemmas in any dialog is that, if the participants do not share a common worldview -- assumptions, categories, etc. which influence the way in which they perceive the world of the topic -- argument is predictably fruitless since one is arguing apples against oranges. We have had several rather dramatic examples in recent weeks in which really very minor news, at least from the perspective of those on this thread, has had major impact on a stock price ... at least in the short run. We with an LTB&H perspective are possibly amused, possibly tantalized by the buying opportunity, but also distressed by the portrayal of a solid company in a light which fails to distinguish between very minor adjustments and fundamental shortfalls of purpose and expectation. I would like to join you in the resolution and make the naysayer present a solid case before one treats it seriously, but I'm not sure I am strong enough or tired enough not to try to knock down foolishness (classic sense, no relation to the investment group) when it rears its silly head. It is hard not to want to smack them on the forehead and ask, "have you actually thought about what you just said?".

To: Mike Buckley who wrote (36821)	12/20/2000 1:25:15 AM
From: Seldom_Blue	Read Replies (2) \| Respond to of 54805

I like your resolution, except when it is more work for me :-) On the serious side: I was not trying to avoid doing my homework. I can understand that asking a generic question like that (from a mostly lurker) can seem that way. That question was directed at you because you are the most knowledgeable SEBL person I know. I will attempt to follow your guideline. <SEBL still sports a high PE. Be more specific, please. Relative to what and why?> I calculated SEBL's PE at 113. That is using a run rate of .14 (their latest quarter number) and today's price of $63. I always compare a stock's PE with that of my mortgage investment, which is at 9 (11% interest rate). Therefore I think the PE is high. I know this is apples and oranges and I know all about PEG and every possible metrics one uses to rate stocks. This is the difficult part. Just how high is high? I have 2/3 of my liquid assets in the stock market. All of the stocks sport PEs several times that of 9. <Would you say this slowing growth may indicate SEBL's tornado is subsiding a bit? What slowing growth? How fast is it slowing? > I was referring to the article's statement of slowing growth. "Growth in U.S. enterprise was about 40 percent year-over-year and 15 percent sequentially, down from 60 percent year-over-year growth and 20 percent sequential growth in 1999. " Since I did not know where he got these numbers, I was taking his comments as his comments. Perhaps this sentence should be taken as doubtful and one needs to find out what he means by "US enterprise", which I took to mean large US corporations. <Imagine a scenario in which you're the CEO of a company that has to scale back its spending budget. What's the last category your going to trim -- the administrative budget, the marketing budget, the R&D budget or the budget for front office software that helps you acquire and keep happy customers? > I run a small organization so my personal experience does not apply. But I have worked in large companies. I also have customers that are the Fortune 500 type companies. It is my experience that when they need to cut costs, they will cut NEW spending first. That means if they already have some type of CRM programs or desks or whatever, they will try to make do with what they have. CRM may be so essential that they will consider they MUST have it. But in large organizations, unless it is previous budgeted, such large expenditure will usually get delayed and delayed. You are also assuming that the CEOs of these companies are thinking long term business viability instead of immediate results. I think the investment climate these days does not reward managers who do not perform short term. My opinion is that I am afraid the slowdown in the US economy (perhaps a recession) will affect SEBL's business more than the past will indicate. I have no data to support this opinion. I do not even have any idea how much SEBL is affected. So the question is: If we discount(using whatever method we individually see fit) the slowdown, will SEBL still be a good buy today? I am not doubting the LTB&H strategy. I am merely trying to decide if I should still wait on the sideline a bit longer. Using Mike's guideline, I will answer my own question first. I think I will wait a bit longer to see the effect of the economic slowdown. Seldom Blue