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

To: William T. Katz who wrote (4881)	11/12/1997 5:22:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 9124

A lot of people on the Quantum and other tech stock threads have the attitude "the stock is rediculously dirt cheap because it is not as high as it was a couple of weeks ago and the fundamentals continue to look good." That sounds like a good argument but it only partly makes sense. Just because Quantum and other stocks reached levels of historically high valuations for P/E, P/S and other measures, doesn't mean that investors have a God given right to expect this trend to continue without let-up. I own QNTM stock but was fortunate to have sold NOV 35 calls against most of my position when the stock ventured over 41. I thought at the time that it was over-extended and would likely pull back to more reasonable levels. However, I didn't think that it would pull much bellow 35. Today those calls I sold for around 7 are now worth 1/16 to 1/8. Someone at the time was sure that QNTM would continue to move up to record prices and record ratios. But if you take a step back for a moment and look at the historical trends for the stock, you will see that Quantum has just reached the level where it is slightly better than "Fair Value" based on historical norms. You have to remember that disk drive/storage sector stocks HAVE NOT commanded the same ratios of most other technology sectors. You can build a good argument today that this sector and Quantum in particular have changed because of strong growth trends and market diversification, but investors have largely viewed the sector as a commodity product sector rift with severe oversupply problems and price competition. Here are some sites that show the historical financial ratios for Quantum. They also show the favorable trend for earnings, margins, and sales growth which should encourage future price expansion: 207.226.179.205 moneynet.com; www1.wsrn.com