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Technology Stocks : Creative Labs (CREAF) -- Ignore unavailable to you. Want to Upgrade?

To: C S Lai who wrote (6504)	12/5/1997 2:27:00 AM
From: Douglas V. Fant	Read Replies (3) \| Respond to of 13925

C S Lai, Agreed- most tech stocks including CREAF need technical improvement looking at charts. Still I stick by my argument of yesterday- if Asia= 25% of CREAF's business, and CREAF sees demand fall 18% in Asia this quarter (worst projection I saw- using Merrill Lynch's Number and assuming no growth anywhere else) , then CREAF would lose 4.75% of its business. Then 4.75% of $2.64 is $.1188 cents, which simplistically drops projected earnings from $2.64 to $2.52-and this assumes no pick up of business elsewhere which may be true as DVD sales rise into the Month of December (as noted in a CREAF news release of about two weeks ago- CREAF said it saw likely 100,000 sales of DVD Units/month by year's end). At 10x earnings CREAF should sell for $25/share; at 15x earnings then CREAF should sell for about $37.50/share. Thus does this projected 4.75% decrease in revenue justify a 30% drop this week in the price of CREAF? to $20.375/share? That is a question each person must ask him/herself. From a fundamental perspective, CREAF looks oversold.... And the statment issued after the December 11th Annual meeting should be instructive, since we will only be about two weeks from close of the quarter, and four weeks from earnings release. Assuming the Financial Accounting Dep't has at least received 25% of accounts receivable for the Month of December by December 9th, then FA armed with data for Oct/Nov, and with partial data for Dec, and last year's December/Christmas sales should be able to make a reasonable estimate for the quarter's earnings.... My guess is that Sim Wong Hoo will simply state that CREAF is "comfortable with earnings estimates for the quarter" and make no projection for future sales growth/shrinkage. Any such projection will properly be tacked onto the actual January earnings release... Now as I've stated tech stocks are not rational- ASND jumped 3 1/2 points today or 12% to $26.5/share on a "rumor"- and ASND's chart is not as good as CREAF's. Its CEO Mory Ejabat also stated today in a tech conference in California that Ascend is "comfortable with earnings projections of $1.05/share and $1.20.share for 1998 and 1999".. AOL jumped in two days about 5 1/2 points to $83/share when Prudential issued a "buy" rating yesteday- based upon projected $.90 and $1.60 1998 and 1999 earnings. And AOL's chart again is not as good as CREAF. And that's about 85x and 55x earningsto boot! Go figure... Sincerely, Doug F.