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

To: Philip Aaron Etttedgui who wrote (8196)	12/13/1997 2:51:00 PM
From: Timothy C. Madulka	Read Replies (1) \| Respond to of 11057

<<...And with a revise FY 98 EPS of $0.30/share that would give it a trailing 12 month PE of ~26, which would make it OVERVALUED EVEN AT THAT PRICE given Smith-Barney's 5-year EPS growth rate of 19%.>> How can you value a company like WDC based upon projected earnings? The disk drive compananies are cyclical and the projected earnings will change with the business cycle. The same is true for the semi equipment companies. A valuation using FY98 projected earnings and a projected growth rate is the same rational that people were using to state that WDC was UNDERVALUED when it was in the high 40's with $3+ in earnings and a projected growth rate of 20%. Why was WDC trading at such a low PE compared to its growth rate when conditions were looking so good? Uncertainty due to the cyclical nature of the industry. This is probably the same reason why the current valuation of WDC should not be based on FY 98 earnings alone (i.e.,uncertainty regarding projected earnings in a cyclical business).

To: Philip Aaron Etttedgui who wrote (8196)	12/13/1997 2:56:00 PM
From: Thomas Haegin	Read Replies (1) \| Respond to of 11057

Re: Book value I cannot confirm the figure of $8 (because I didn't make the calculation mysef yet), but I woud add that IMO in the case of WDC, the book value is of high quality in that the co. has no LT debt and relatively little fixed assets that must be depriciated relatively quickly in light of the fast technological progress. Thomas

To: Philip Aaron Etttedgui who wrote (8196)	12/13/1997 11:18:00 PM
From: Thomas George Warner	Read Replies (1) \| Respond to of 11057

Mr. Etttedgui would hate to bust your bubble but there are many well known companies that sell far below book value. And believe me in an irrational market many companies fall far below book value. We are in an irrational market. Company/share price/book value Niagara Mohawk Power, 9 7/16/$19. Boston Chicken 8 3/16/$15.65 Farah Inc 5 3/16/$8.35