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To: JakeStraw who wrote (6125)	2/7/2001 1:25:26 PM
From: pirate_200	Read Replies (1) \| Respond to of 10934

> But if it is estimated that NTAP will grow e.p.s. by 50%, then it's p/e should be 50%... 1. It isn't estimated to grow by 50%, I said "even if growth were 50%" meaning I am choosing a low growth rate, that I don't think will occur, to show how oversold we are currently. 2. PEG: PE to Growth rate ratio is something people use as buy/sell points. Simplistically, if PE is below the growth rate (demonstrated or anticipated, it's up to you what you use as a gauge), the stock is a BUY. If PE greater than growth rate, there is more "speculation" in the target price. NTAP and other growth stocks get traded at 2-3 times their growth rates. Even a large company like EMC or CSCO gets this multiple at times, even though the likelihood of them "blowing out" earnings at their size is lower. Traditionally, perceived stability is factored into the valuation equation. This is the rub: some people consider larger companies as "more stable" and give higher PEs/PEGs to them than smaller "less stable" growth companies. Personally, I feel it is sometimes more risky to give a higher PEG to a company like EMC or Cisco because the likelihood of any extreme acceleration in their business is less likely as they grow larger. It all has to do with your level of risk (or what you perceive as "risk"), your belief in the technology, company, management and execution of the company. I guess we'll see tomorrow what the future holds. I'll write up my thoughts more completely and post them today and maybe you'll better see where I am coming from...