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

To: techreports who wrote (44703)	7/19/2001 12:58:27 PM
From: Thomas Mercer-Hursh	Read Replies (2) \| Respond to of 54805

If the economy turns around in 2002, Siebel could manage to do better than 12% EPS growth.. So, the first key question would seem to be whether this modest growth rate was an indication of a gorilla reaching plateau or otherwise moving out of the tornado or whether it was a temporary state imposed by larger economic conditions. Assuming that one decides it is temporary, then the second key question is whether the company has accurately forecast the extent of this reduction or whether the sky is still falling. Assuming that one decides the sky is not falling and that we are more or less at the bottom then the third key question would seem to be whether there is likely to be a better time to buy in the future. While the ratios might be more favorable in the future if the company recovers growth faster than the stock price, it seems unlikely that the stock price will be meaningfully lower than it is now. This seems to me to point to buying even though ones normal valuation metrics said not to.

To: techreports who wrote (44703)	7/19/2001 11:24:41 PM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

techreports, Mike you feel SEBL is overvalued or expensive, but a couple weeks ago i thought you said you were thinking about selling SNDK and putting the rest of your funds into your remaining four stocks. Not quite right. I did in fact sell my SNDK and CSCO. I plan to deploy the proceeds generated from the sale into a stock not yet selected. You probably remember that I wrote a month or two ago that I would sell all of my Qualcomm LEAPS, which I subsequently did. I also explained my intention to use half the proceeds to buy the next series of Qualcomm LEAPS, which I did. The other half of the funds was to be used to purchase Siebel LEAPS. I will probably do that but won't do it if the stock's price doesn't get low enough. At the time that I explained my intention, that was before earnings were released yesterday. Siebel didn't have a blow-out report and management didn't give any reason for analysts to raise estimates. So the reason the fool ratio is up near 5, b/c growth is expected to be 12%? If the economy turns around in 2002, Siebel could manage to do better than 12% EPS growth.. Absolutely. And even after today's 12% drop, the stock is still priced with the assumption that much more rapid growth will resume. Everyone, You might remember that I pledged months ago to make a point of mentioning it when a strong case can be made that a stock is dramatically overvalued. That's because of the intense remorse shared by so many in the thread after the huge fall in the Naz. I'm not saying there are or aren't a lot more stocks out there that are overvalued. I haven't even run valuations on my own stocks recently. But I very much believe that Siebel is very much overvalued given the set of circumstances we are currently living. If Siebel's fundamentals change dramatically for the good, it's very possible that today's price will prove to be extremely undervalued. Anyone following this stock largely because I follow the company and report on it, rather than doing their own homework which is what they SHOULD be doing instead of paying attention to me, should definitely remember that valuation still matters, despite that the stock has dropped about 80%. --Mike Buckley