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Technology Stocks : John, Mike & Tom's Wild World of Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (2269)	3/29/2001 6:34:29 PM
From: Logain Ablar	Respond to of 2850

If he was smart he would have put all his assets into trusts for wife and kids and not in his name. The guy's life is toast.

To: Jorj X Mckie who wrote (2269)	3/30/2001 2:42:14 PM
From: John Pitera	Read Replies (1) \| Respond to of 2850

Hi Tom, briefing has the PE for the 81 profitable NDX companies at 33, the losses of the other 19 push it up to 100. It's a good article but there charts will not come out readable here: Deconstructing the Nasdaq 100 30-Mar-01 00:14 ET [BRIEFING.COM - Gregory A. Jones] Like us, you have probably read those articles that mention that the Nasdaq 100 price/earnings ratio is still a lofty 100. Like us, you have probably wondered about the origins of that P/E -- what do the P/Es on individual Nasdaq 100 stocks really look like. Unlike us, it's not your job to go do that kind of legwork. So we had better get to it. There are all sorts of ways you can look at Nasdaq 100 valuations, and all sorts of arguments that can be made to support overvaluation, undervaluation, or perfect valuation. We're not going to get into those arguments today -- we just want to offer you some different looks at the valuations of the 100 individual stocks. The Overall P/E Though you might have thought we just pulled that 100 P/E figure out of a hat, that is in fact the current P/E for the Nasdaq 100, based on trailing twelve month earnings and Thursday's closing prices. Outrageous, you might think. But it's not as bad as it sounds. We arrive at this P/E by adding total prices and dividing by total earnings. The problem is that some companies are losing considerable amounts of money, and therefore skew the entire calculation. Another way to look at the Nasdaq's P/E is to look at only the stocks that have had earnings over the past 12 months. Of the Nasdaq 100 stocks, 81 have been profitable over the past year (excluding charges), while 19 have not. For those 81 stocks that have made money, the P/E is a much more reasonable 33. That's not cheap, but it's not 100 either. One other way to look at the NDX valuation is to calculate the P/E based on forward earnings. This can be a very dicey game, however. Current earnings projections are in freefall, so a forward P/E that looks reasonable today might be quite rich tomorrow. Furthermore, it is difficult to compare apples with apples. What you would like to see is future earnings estimates that all cover the same period. In reality, you tend to get estimates for the next fiscal year, whose end-date can vary from early 2002 to early 2003. That's far from ideal. Nevertheless, we calculcated the Nasdaq 100 forward P/E for the 85 stocks that are expected to make money next year. The result: 28. Again, not absurd, but not what you would historically consider cheap.