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Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Shane Venem who wrote (7674)	11/17/1997 7:12:00 PM
From: still learning	Respond to of 11057

Are people buying DD sotcks bottom fishing? Are earnings really in the toilet? Depends what you mean by "turn around earnings wise" Let's do the comparison QNTM has great YOY, and Q2Q comparisons, with increasing top line revenue as well. Trailing 12 month profit margin = 5.6% Net income $340 mm on sales of $6.04 bb ROE 39%+ PE (based on TTM income of $2.46 which includes at least one rough quarter) = 12x trailing income. The $64 question right now is whether all this was an aberration or is a trend. For WDC and SEG, the only other 2 DD co's that matter, there are real questions, but even so, their YOY performqances have been good for essentially the past 4-6 quarters. WDC is in bad shape right now because they are getting hurt in both of their key markets -- desktop and servers. On the other hand, to write of DD co's and call this a "hot" tech market is jumping the gun just a bit. I would hardly call this a red-hot tech sector on the basis on 1 day's recovery. I have learned over the past 3 years that techs are being treated increasingly brutally in Oct and into Nov -- beyond any necessary or prudent punishment based on fundamentals. (witness JBIL, which said it's 100+% earnings growth would slow and eventually move toward 30% -- did that merit taking 50% of its valuation away? Yes, that was a serious issue being raised. Yes, the stock had run up dramatically, but had it gotten that far ahead of itself?? I think not.) SEG has bona fide problems right now. Is it being overly punished? Depends if you take a vast long term view of as much as 6 months or not. If, god forbid, you take a 3 year view, then you don't belong on these threads. I don't know if the DD sector has hit bottom, but clearly units & revenues are growing at a healthy rate. I believe that tax-loss selling has been moving earlier each year (like Christmas dept store sales) and today we are seeing the end-of-the-year doldrums. That's why Dec and Jan have become such great months for tech stocks. People sell now because, based on the volatility, they can almost always find some major losers in their tech portfolio at this time of year. Volatility fuels this feeling and they dump their shares. Does this mean SEG and WD will move back up early next year? They may or may not -- since their problems are not seasonal or imagined but real. But looking 3 years out, this will be one of the top 2-3 buying oppty's -- especially for anyone who failed to get in a year ago. Be prepared, however, for a longer ride than 3 weeks.