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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: KMcKlendin who wrote (48330)	6/21/2001 6:29:41 PM
From: Proud_Infidel	Read Replies (2) \| Respond to of 70976

OT Keith, Excellent post.....my thoughts exactly. There are people however, who do not have it in their nature to be able to sit on dead money, even if that dead money will most likely jump to life within the next year. Personally, I have no qualms about the stock sitting at these levels for a time; in fact I would welcome it as it will give me the opportunity to buy more. I think what it comes down to is that those who are willing to take intelligent risks will be amply rewarded, especially with JDSU. JDSU at 10 is an intelligent risk IMO. Brian

To: KMcKlendin who wrote (48330)	6/21/2001 8:41:43 PM
From: John Trader	Respond to of 70976

OT-FO: Keith, Good post, and I like your logic. Regarding JDSU looking like good value here, I wish I was better able to evaluate this. I think the fiber optic industry is hard to value, because this is the first "bandwidth cycle" we have been through. The forecasts for how long this cycle lasts are all over the place. I wouldn't take the book value valuation of JDSU very seriously. Stocks in real distress can sometimes go down to or below cash value even. Having said that, JDSU looks cheap to me based on P/S and the PEG ratio, if one can believe that FO will be a big growth area again in a year or two, which I think it will. However analysts forecast a significant decline in earnings in 2002, for whatever that is worth. One reason why I have been trying to get others on this thread interested in the FO area is I think the same type of logic that determines when stocks like AMAT are a good buy applies to the FO sector. Getting back to JDSU, I like that they have a reasonable amount of cash, I sort of dislike that they just did a big merger (some culture clash risk or integration risk). My guess is they will emerge out of this stronger and again be the "Gorilla in the Midst" in the FO world (Fortune article last year). I have been nibbling cautiously on JDSU. It blows my mind that the analysts have been so terribly wrong on the FO sector, and so I am using them more as a contrary indicator now. I think that whenever we hear the "dead money" argument, we should consider buying if it is a great company since they are often way off on their predictions of how long it will take to come back (tend to be too pessimistic in bear markets on this I think). I feel safer with GLW rather than JDSU, so I have been buying more of GLW. So far I am getting hammered, but I remain hopeful. Smart Money today just did a bullish article on GLW. I will post the link. It is true that GLW did a big realignment towards FO a few years ago, but I still like the fact that the company is 150 years old. What other tech company can you say that about? Seems like a sure bet they will survive, unlike the Exds's of the world. Thanks for your post. John

To: KMcKlendin who wrote (48330)	6/21/2001 9:35:08 PM
From: Cary Salsberg	Respond to of 70976

RE "To be fair, my technique has possible weaknesses: (1) the assumption that JSDU's profits will significantly grow in the LT future may be wrong; (2) my fundamental value analysis may be wrong and the stock may still be overpriced." Since I started the "Blood" thread, I agree with your general technique. The weaknesses you mention above are not with technique, but with the necessary analysis to support the technique. What analysis have you done to support your long term growth hypothesis and have you quantified your expectation? What kind of fundamental valuation analysis did you do and is it quantifiable? I think it might be helpful to expose your analysis to others' scrutiny before you commit your cash.

To: KMcKlendin who wrote (48330)	6/22/2001 1:31:17 AM
From: brunn	Read Replies (1) \| Respond to of 70976

JDSU vs AMAT: JDSU is bottoming at roughly the same valuation that AMAT bottomed at in December and again in April: Price/Sales of 3 and stock price falling to roughly 1/2 of peak quarterly earnings (JDSU's recent price of 10 is a little less than 1/2 of its peak quarterly earnings of 21 cents and AMAT's low in the mid 30's was similarly a little less than 1/2 of its peak earnings of 77 cents.) Price/Book is difficult comparison since JDSU's book value of 47 is inflated by the SDLI merger, I believe. However, they both bottomed at roughly the same Price/cash of around 6.5. So, if AMAT could bounce off these valuations it seems reasonable to expect the same for JDSU. Of course somebody might argue that business is worse for JDSU than it is for AMAT but given the data from tonight's book- to-bill it is hard to believe it could be much worse. Finally, one could argue that a price/sales of 3 is still too high for both stocks. If we are not at the bottom we must be close if only because there is such a clear consensus among analysts that tech is headed lower. You cannot listen to CNBC for more than 5 minutes without hearing an analyst deriding tech stocks. The mirror image of what you heard 15 months ago. Actually, JDSU is almost a poster child for CNBC's perception of the technology sector: everybody loving it a year or two ago and slowly over the last year becoming more and more criticized until it became something of an inside joke amongst the CNBC commentators: during their viewer "Buy, Sell, or Hold" call in segments they would laugh about how almost without fail some caller would ask whether to buy or sell JDSU ("Tomorrow we will have so and so from Merril to answer your question about JDSU"). The technology bear market will either bottom when the analysts are the most negative on the sector or when they forget about the sector. Analysts today cannot make their recommendations without warning against technology (sometimes giving a token thumbs up on MSFT or IBM). In a few months, I predict they will start recommending stocks without even mentioning the technology sector--when that becomes commonplace, I would feel very comfortable with my tech holdings. I remember advise from the author of the aptly named Turnaround newsletter that looked at buying companies valued at close-to-bankrupcy prices hoping for a turnaround: He would watch for stocks to bottom over a year's time and then wait a little longer before buying. His impression was that it took a good year for most people to hate a stock, but a bit longer for everyone to forget about it and it wasn't until everyone forgot about it that you could get the best price. In a similar vein, it has taken about a year for everyone to hate technology (except, I guess, the few of us die-hards typing on Silicon Investor message boards) and may take a few more months for everyone to forget about technology. By that time, the viewer call-ins to CNBC will only be asking about Caterpillar and Noble Drilling and not a peep about JDSU.