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.

Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (15538)	6/3/2004 1:04:21 PM
From: BWAC	Respond to of 95383

INTC sucks. Lets all go out and short up 3 or 4 thousand shares in front of the midquarter update. They always tank on guidance. Easy money there. Might even call it free money.

To: Gottfried who wrote (15538)	6/3/2004 1:27:44 PM
From: Return to Sender	Read Replies (1) \| Respond to of 95383

The Incredible Shrinking P/E Thursday June 3, 11:50 am ET By Cody Willard, Special to RealMoney.com biz.yahoo.com Remember when Motorola (NYSE:MOT - News) reported a shockingly strong quarter? After soundly beating estimates, which billion-dollar companies rarely -- if ever -- do on this magnitude, Motorola's stock, already in a steady uptrend, was suddenly valued at less than 20 times next year's earnings, because estimates had to go immediately higher. Everyone had been forecasting earnings of 62 cents per share in 2005. Now they expect 92 cents. The stock instantly ripped from $17 (with a forward P/E of 27) to $21 (with a P/E of 22). Here's a company with its foot in all kinds of important tech arenas that said business was way better than anybody expected. And its P/E multiple contracted. And now? Motorola is back at $19, which puts its forward P/E at about 20. Remember when Microsoft (NasdaqNM:MSFT - News) beat estimates and guided higher? The stock jumped from $25 to $28, a move it basically hadn't seen since the rollout of Windows 2000. Although so far, forecasted consensus earnings for next year have only inched up, Microsoft's P/E multiple has also contracted. Excluding cash, the stock now trades at about 15 times next year's earnings -- that's for the most profitable company in history. The bulls were hoping that the old stalwart would kick the markets out of their earnings-season funk and lead stocks higher. Microsoft is now back to $26. The list can go on and on. Few stocks were able to hold their post-call gains -- if the stock was lucky enough to have done anything besides sell off after the report, anyway. Yahoo! (NasdaqNM:YHOO - News), Research In Motion (NasdaqNM:RIMM - News) and Sycamore (NasdaqNM:SCMR - News) are a few winners that held pretty tough or even ran further. For the most part, though, a lot of great earnings, which changed real-world P/E ratios and profit expectations, have been wholly ignored. Or, looked at another way, they were simply more than already priced in. Oil, terrorism and interest-rate concerns have worked to shrink multiples in the market in the face of some great earnings. It goes back to the question of whether this is as good as it gets. I think there are more upside surprises, but as estimates for most companies and industries have already risen substantially, it will be harder to find the ones with big upside surprises in store. Stocks at those companies that do far outpace expectations will continue to rise, even in the face of a shrinking P/E multiple, a la Motorola. If interest rates and bond movements steady and access to capital remains strong, if we convince ourselves that we're winning the war on terrorism, and if oil can come back in despite the supposed supply/demand imbalance, the possibility for multiple expansion comes back into the equation. That would obviously result in even higher stock prices. Finally, if any of the above doesn't work out and if earnings estimates turn out to be wrong to the high side, well, it's going to get ugly fast.

To: Gottfried who wrote (15538)	6/3/2004 4:02:45 PM
From: Kirk ©	Read Replies (2) \| Respond to of 95383

There is one thing that has me baffled about this last 6 months. Prices in the sector for most of the stocks are significantly lower than in Dec 2003 yet I just checked Del's web site to see what the PC I bought last Dec would cost me today.. and it is still a bit more expensive TODAY when all is said and done. It was nearly $200 more a few months ago. Dell might have pushed extra hard to make their 2003 numbers, but this seems awfully strange to have something roughly the same to slightly more expensive 6 months after purchase. I wonder if there are items that are hard to make such as the very high resolution 1900x1200 15.4" monitor, the Pentium M 1.5, the 128Meg video, 60GB HD at 7200RMP, wireless Centrino stuff or the memory??? This was all prety hot stuff half a year ago but you would think prices would fall off a cliff by now. I'm not sure where the disconnect is.... but I doubt HP and Dell are swimming in excess profit margins. So why haven't the component costs fallen? High demand? It might be interesting for your plots to chart some sort of "desktop replacement notebook PC" over time where you might get a family of curves showing how the different models roll off with time as they are replaced with new ones, etc... tons of work... but I wonder if the prices would show us anything? I'll see if I can send you a summary of my PC that is on the 2nd monitor in case you are interested in the idea. It sure seems strange.... Kirk