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

To: christopher d licata who wrote (7806)	11/23/1997 6:38:00 PM
From: Harry Stein	Respond to of 11057

There must be a lot of people out there who believe that the $1.50 profit forcast for next year may be somewhat optimistic. I like the company but am fearful of continued over capacity and slim margins. Out at $25, looking for time to buy, but think things may get worse. Best of luck.

To: christopher d licata who wrote (7806)	11/23/1997 6:39:00 PM
From: Thomas George Warner	Read Replies (2) \| Respond to of 11057

The PE of any stock is a mathematical ratio of the stocks current price to its earnings. It has no significance relative to whether it is a good company, or at the top or bottom of its earnings range. It is just a ratio. Similarly one cannot compare the PEs of stocks in different sectors. analyzing a stocks PE without knowing its earnings and revenue growth rates, or perception of investors to its long term growth rate is like trying to solve a mathematical problem with two equations and 10 unknowns. If we assume that WDC has an earnings growth rate over the next 12 months of 20% (I believe a conservative value), than at a PE of 9 it is grossly undervalued to its historical data.. In the case of WDC it has never had a PE of 15 since 1984 if my data is correct. Lastly if we assume earnings next year of $3.00/share and a growth rate of 20% than the target price would be $60.00 not $45.00, since one cannot forecast accurately what the price will be. Earnings and price are mutually exclusive. I do agree that WDC is an exceptional buy at this time. Just my opinion based on fact.