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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: Crystal ball who wrote (12408)	3/8/2001 12:00:16 PM
From: JakeStraw	Read Replies (2) \| Respond to of 17183

CB, Don't you feel that NTAP is still a mite overvalued? Earnings estimates for F.Y. '02 are only around .57...

To: Crystal ball who wrote (12408)	3/8/2001 12:59:51 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 17183

What numbers do you use, to come up with a PEG <1 for NTAP? repost from G&K thread: Normally, I like to buy a company at a PEG of 1. That requires guessing the PE (since I use forward 12M earnings), and guessing the LT growth rate. What will NTAP earn next year? In the current market environment, investors won't pay for 2002 or 2003 or 1010 earnings. Unfortunately, with the credit spigot shut off, and the possibility of a recession, NTAP's earnings for 2001 are in a lot of doubt. Consensus, I think, is 0.52, but I doubt that happens. Not when your customers are seeing their assets auctioned off on Ebay, and their stocks delisted. As CSCO and EMC have found out, all spending is discretionary, even routers and storage. OK, as a WAG, I'll say they make 0.40 in 2001. How about the LT growth rate? Let's be real generous, and say 50%/year. Nobody grows at that rate longterm, but let's suspend disbelief, and see the rosiest of possible scenarios unfolding in the future. Then: fair value = 0.40 X 50 = 20 for NTAP I showed this chart to my wife: bigcharts.com and, without knowing anything about the company, she said, "It looks like it was flat for a long time, and then suddenly took off at the end of 1999. And it looks like it's going to give all that back, so why don't you buy it when it gets back there, at about 16. Then you'll know the hype is out of it." That's as good as any other advise I've heard. In addition, NTAP has been acting extremely weak. When other techs go up, it is flat. When other techs go down a bit, NTAP goes down a lot. It has been hitting new lows every week for a long time. I don't think ValueInvestors are going to step in soon to support NTAP (they are much more likely to buy EMC, or even CSCO or INTC), so we could easily go to 10 before this bear market in techs is over.