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Technology Stocks : GGNS Genus -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (1989)	1/14/2005 1:21:04 PM
From: The Ox	Read Replies (1) \| Respond to of 2006

From a short term perspective, I think the stock was way over priced for a company that will only have flat revenue (at best) in the next quarter. At $40/share the PE of roughly 34 was justifiable as long as the company was growing eps in the 25 to 35% range yoy. With questions about just how profitable they will be down the road, it makes sense (to me) to reduce the PE to the 20-25 range, which is where the stock is trading at the moment. Insiders sold a ton of stock in the 30s, which is another indication that the stock was ahead of itself. I also wonder if the company didn't intentionally 'slip on the banana peel' to bring the excessive expectations down to earth. Basically, they barely missed in the last quarter and have guided expectations to a very reasonable, if not excessively conservative, revenue and eps range. I'm not a big fan of catching the falling knife right after a big screw up, so I am going to wait to see where the fallout ends. The stock could continue to sell off for the next few months. Those who bought anywhere in the past few days to months are underwater and will get frustrated. This should keep the selling pressure constant and combined with the huge short position, I find it hard to get real excited about buying the stock at this stage. I would be much more interested under $20/share but there could be a nice dead cat bounce in the near future.