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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: Cymeed who wrote (11285)	12/9/1997 6:15:00 PM
From: sepku	Respond to of 25960

>>>Oracle's blame on Asia Flu is just a cheap excuse. Oracle is losing market share to their competitors and they don't want to publicly admit it. If it is just Asia, the stock should not drop 30% in one day.<<< The article I'm pasting below, is a perfect explanation of why Oracle (and any other company who misses its numbers) gets so severely punished by the Street. Style Pts. --------------------------------------------------------------------------------------- Big Boys: Merrill Lynch Poll Sheds Light By Andrew Bary Have you ever wondered what prompts Wall Street's big boys to pull their billions out of one stock and put them into another? Well, now you have the answer, or rather, a series of answers, thanks to the latest annual poll of Merrill Lynch's institutional clients. Some of their responses are surprising. While the average investor might select blue-chip companies that boast familiar products, strong balance sheets and secure dividends, institutions shun such straightforward approaches, Barron's reports. Among the 122 outfits that responded to Merrill's poll, the top strategy was buying stocks of companies that had just delivered higher than expected earnings and selling those whose earnings had fallen short. On Wall Street, these occurences are known as "earnings surprises." As the accompanying table shows, this strategy played a role in the stock selection of 54% of the institutions. The conceit behind the "earnings-surprise" approach is that winners are likely to keep on delivering, while companies whose profits fall short of Wall Street expectations will continue to have trouble. The popularity of this strategy goes a long way toward explaining why stocks get so severely punished after failing to meet expectations. The second most popular yardstick is return on equity. Buyers in this category generally like to see earnings that equal 20% or more of a company's stated equity. The next most common technique is what Merrill calls "estimate revision." The folks who follow this indicator are the ones you see glued to their First Call screens to see whether analysts are raising or lowering their profit estimates on particular companies. Richard Bernstein, director of quantitative research at Merrill Lynch, says the results are useful as a gauge of which strategies have gained popularity in recent years and which ones have fallen out of favor. He notes, for example, that "earnings momentum has waned in the past year, and the use of dividends continues to decline, too." Indeed, a year ago earnings momentum ranked No. 3. Now it has fallen to No. 7 out of the 23 factors measured. It's easy to understand why. In the past year, some highflying stocks, including Oxford Health Plans, Ascend Communications and Cabletron Systems, have crashed, leaving many momentum investors badly burned. For further evidence, just look at the pitiful returns this year at one of biggest momentum-oriented investors, Pilgrim Baxter's $6 billion PBHG Growth Fund. It's down 2% in 1997, while the Standard & Poor's 500 Index, including dividends, is up 34%. When Merrill began its survey in 1989, nearly half of all investors paid attention to dividends. Now, only 12% do. The waning interest in dividends reflects a host of variables, including the fact that so many companies have elected to help shareholders by using their cash to buy back shares rather than increase their dividends. Also, in the current bull market, many investors get more excited by capital appreciation than income. It's ironic that dividends now rank so low in Merrill's poll because, at least since the market's plunge this past October, defensive stocks with relatively high dividends, like the Baby Bells and electric utilities, have been among the top-performing industry groups. Maybe dividends will score higher in next year's poll.