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To: Bill Harmond who wrote (26595)	12/13/2005 2:49:57 AM
From: Elroy	Read Replies (1) \| Respond to of 57684

but P/S isn't a good measure for valuation because of the various moving parts on the income statement below the top line. P/S isn't the best method for rapidly growing (or declining) companies is how I would put it. At least, when you see a company has a trailing P/S of 35x, you can say IT HAD BETTER be growing really, really fast! By itself, PS isn't very useful I agree. FWIW, I do compare the PS ratio with 10x the trailing operating margin. This gives you a ratio of PS versus profitability of trailing sales. For example, a 15% operating margin company trading at 1.5x sales would give you 1.5x/(10%x10) =1.0x for the ratio. What I've found for tech stocks is that 1.0x is low, ~1.4x is about average, and anything above that is getting expensive. Its surprising how you'll see most stocks trough at 1x though, regardless of their business area. In other words, 10% operating margin companies trough at 1x sales, 20% operating margin companies trough at 2x sales, 30% at 3x, etc. Its helpful for stable companies, but doesn't take into account revenue growth or margin expansion/contraction likelihood. The size and rate of growth of earnings and free cash is what counts. When investors buy a stock they are principally buying a discounted interest in the future bottom line, not the top. It varies from stock to stock. When they buy SFA, they are buying the likelihood that the announced acquisition by CSCO (or a higher bid) goes through. When they buy CIEN, they are buying the "greater fool" theory. In the case of GOOG and similar high growth stocks I would argue many investors are just buying momentum with minimal concern for valuation. As I said, with GOOG, the PE to next twelve months EPS growth rate is 1.0x. If you think 2007 EPS growth will be above 2006 EPS growth (accelerating growth), that's cheap. If you think 2007 EPS growth will be less than 2006 EPS growth(decelerating growth), that's expensive.

To: Bill Harmond who wrote (26595)	12/13/2005 4:08:09 AM
From: stockman_scott	Respond to of 57684

NASDAQ Announces the Annual Re-ranking of the NASDAQ-100 Index NEW YORK, Dec. 9 /PRNewswire-FirstCall/ -- The Nasdaq Stock Market, Inc. (NASDAQ(R)) (Nasdaq: NDAQ) announced today the annual re-ranking of the NASDAQ-100 Index(R), effective with the market open on Monday, December 19, 2005. "The re-ranking is a unique event in that investors ultimately determine which companies are members of one of the most closely followed indexes in the world," said John L. Jacobs, executive vice president, NASDAQ. "The re-ranking process is objective, rules-based and transparent -- one that ensures the NASDAQ-100 Index will continue to be an important benchmark by which you can invest in a diverse array of NASDAQ-listed companies." The following 12 issues will be added to the NASDAQ-100 Index: Google Inc. (Nasdaq: GOOG), NII Holdings, Inc. (Nasdaq: NIHD), Expedia, Inc. (Nasdaq: EXPE), Patterson-UTI Energy, Inc. (Nasdaq: PTEN), NVIDIA Corporation (Nasdaq: NVDA), Urban Outfitters, Inc. (Nasdaq: URBN), Cadence Design Systems, Inc. (Nasdaq: CDNS), Activision, Inc. (Nasdaq: ATVI), RedHat, Inc. (Nasdaq: RHAT), Monster Worldwide, Inc. (Nasdaq: MNST), CheckFree Corporation (Nasdaq: CKFR), and Discovery Holding Company (Nasdaq: DISCA). The NASDAQ-100 Index is composed of the 100 largest non-financial stocks on The NASDAQ Stock Market(R) and dates to January 1985 when it was launched along with the NASDAQ Financial-100 Index(R), which is comprised of the 100 largest financial stocks on NASDAQ(R). These indexes were originally designed to segment NASDAQ into two major industry groups to support media coverage and to act as benchmarks for financial products such as options, futures, and funds. The NASDAQ-100 is re-ranked each year in December, timed to coincide with the quadruple witch expiration Friday of the quarter. On a cumulative price return basis, the NASDAQ-100 Index has risen over 1238.0% since inception, and it has outperformed several major domestic and international stock indexes for the ten-year period ended November 30, 2005, although past performance is not indicative of future performance. For the most recent one, five, and ten-year periods ended November 30, 2005, the cumulative return of he NASDAQ-100 Index was 6.4%, -33.3%, and 181.7% respectively. Shares of each company in the Index are included in the NASDAQ-100 Index Tracking Stock(R) (QQQ(R)) (Nasdaq: QQQQ), which is an exchange-traded fund (ETF) that trades like a stock. It is the most actively traded listed equity security in the U.S., and it is one of the world's most actively traded ETFs as measured by the average daily share trading volume. QQQ represents ownership in the NASDAQ-100 Trust(SM). The Trust holds a portfolio of equity securities that comprise the NASDAQ-100 Index and aims to provide investment results that, before expenses, correspond with the NASDAQ-100 Index performance. Since its inception in March 1999, the Trust's total assets have grown to over $20 billion. The NASDAQ-100 European Tracker Fund(R) (EQQQ(SM)) is listed on Borsa Italiana, SWX Swiss Exchange, Deutsche Boerse, virt-x, and London Stock Exchange and is designed to closely follow the NASDAQ-100 Index. EQQQ provides European investors with low cost access to the entire range of companies in the NASDAQ-100 Index in European hours, on European markets. Since its inception in November 2002, the Fund's total assets have grown to approximately $315 million. EQQQ is not available to U.S. investors. There are also 22 domestic mutual funds and 9 international funds linked to the NASDAQ-100 Index. For more information about the NASDAQ-100 Index, including eligibility criteria, visit nasdaq-100.com. As a result of the re-ranking of the NASDAQ-100 Index, the following 12 companies will be removed: Career Education Corporation (Nasdaq: CECO) Dollar Tree Stores, Inc. (Nasdaq: DLTR), Intersil Corporation (Nasdaq: ISIL), Invitrogen Corporation (Nasdaq: IVGN), Level 3 Communications, Inc. (Nasdaq: LVLT), Millennium Pharmaceuticals, Inc. (Nasdaq: MLNM), Molex Incorporated (Nasdaq: MOLX), Novellus Systems Inc. (Nasdaq: NVLS), QLogic Corporation (Nasdaq: QLGC), Sanmina-SCI Corporation (Nasdaq: SANM), Synopsys, Inc. (Nasdaq: SNPS), and Smurfit-Stone Container Corporation (Nasdaq: SSCC). NASDAQ(R) is the largest electronic screen-based equity securities market in the United States. With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology. For more information about NASDAQ, visit the NASDAQ Web site at nasdaq.com or the NASDAQ Newsroom at nasdaq.com.