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

To: StanX Long who wrote (58391)	1/4/2002 2:40:43 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

Reality check January 3, 2002: 4:21 p.m. ET After the Nasdaq's 40 percent run-up, investors love tech again. But are expectations out of control? By Adam Lashinsky money.cnn.com SAN FRANCISCO (CNN/Money) - People are feeling pretty good about tech these days: Nearly 63 percent of CNN/Money readers who responded to a year-end poll believe there will be a tech-stock rebound in 2002. This enthusiasm for a rebound begs an important question, however -- how much of a rebound do you expect? (For what it's worth, we didn't ask that question.) The relativism here is relevant. In their hearts, tech-stock investors seem to think a return to the roaring 1990s is just around the corner. They long for the days when hot companies double and triple in a matter of months. When they say "rebound," they secretly mean "raging rebound." But the data suggest otherwise. And any wise investor should check their expectations against reality. To illustrate the point, listen to what Wall Street analysts say when they talk about recoveries in the performance of stocks that broke investors' hearts a year ago. In report after report, analysts talk about recovery but in the same breath add caveats. Consider an influential upgrade report Thursday on EMC (EMC: up $1.79 to $16.59, Research, Estimates) by H. Clinton Vaughan of Salomon Smith Barney. The report helped send EMC's shares up nearly 13 percent for the day. But Vaughn's recommendation wasn't exactly bullish. Here's what he wrote: "EMC has moved past its fundamental bottom and begun to recover (albeit at a slow pace). Although we do not expect hyper growth from EMC in the near term, we expect to see EMC crawl, walk and then run out of its September-quarter fundamental trench." Now let's put some of this in perspective. Twelve months ago, EMC was forecasting 35 percent revenue growth in 2001, to $12 billion. The final result looks to be more like $6.9 billion, not only a massive miss but an ugly decline from 2000 revenue of $8.9 million. And for 2002, Vaughn forecasts revenue of just $5.6 billion, a decline of 19 percent. In addition, Vaughn expects EMC to lose money in 2002.