Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (7751)	11/24/2001 1:12:10 PM
From: LTK007	Respond to of 99280

i highlight this tidbit from the barron's article<< Q: What about the coming recovery? A: Investors are over-discounting it. Since many companies don't even have earnings today, look at price-to-sales ratios. The price-to-sales ratio for tech in the aggregate is about 3.5 to 4 times, depending on how you measure it. If you look at recent trough levels, say in '96 and '98, that doesn't look so bad. But we'd argue that conditions are more like the mid-1980s. Back then, the top 50 tech stocks bottomed at 0.8 times sales. Q: You don't think we are going that low, do you? A: No, but there's enough risk to scare me. The reason we probably don't get down that low is that there is a lot more software today. Q: And software tends to have higher margins then hardware. A: Right. But with operating margins at a 10-year low, what are current sales worth? You could argue that tech company sales are worth less than their value of five or 10 years ago. >>end quote