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Technology Stocks : INVX Innovex Comdex Winner !! -- Ignore unavailable to you. Want to Upgrade?

To: Douglas V. Fant who wrote (1882)	12/14/1997 5:22:00 PM
From: Kurthend	Read Replies (2) \| Respond to of 3029

Just read this on the Motley Fool. I didn't copy the whole article, just the part concerning INVX. The MF did say QNTM was one of INVX's major customers. Unless something has changed in the last few months I was under the impression the QNTM was a 2nd tier buy (Yamaha, SEG, and RDRT being the 1st teir customers-maybe MF was thinking of who RDRT sells to?): fool.com Innovex (Nasdaq: INVX) (N) (S) is one of the few stocks in the world trading at 7 times earnings estimates while having 24% net profit margins. Geesh! At some point the market will see the value of this company as slightly higher than the value of your typical low-margin disk drive maker, the stocks of which are selling at these low multiples and perhaps for good reason. Innovex was chosen for the Fool Port in part because it has such incredible margins and because it sells product to nearly all of the drive makers -- owning 70% of its market -- and it isn't a drive maker itself. It suffers a slowdown when they do, but not with as much consequence. The company hasn't had to cut prices and hurt margins as the drive makers are often forced to do, and it has still shown strong growth year-over-year. The stock lost $3 on Friday on confirmation that drive makers are lowering orders from other companies and perhaps on the Quantum news fromÿthe day before (Quantum is one of the three largest drive makers in the world and expects lower earnings in part due to drive prices, and is a major customer of Innovex); and perhaps it fell because about two-thirds of Innovex's sales are made in Asia. We don't think that companies are going to stop buying lead-wires that cost a few quarters apiece, though, especially when they're needed in order for a disk drive to work. It's difficult for Innovex to grow at a pace slower than the drive industry, which -- when the disk drive competitors aren't stuffing the drive channel to the hilt at their own peril -- grows with the computer industry, for the most part. Earnings estimates have been lowered consecutively as the expected growth in the drive industry has continued to slow since we bought the stock, however, and now analysts expect Innovex to grow earnings about 10% in fiscal 1998, rather than 20%. Innovex has stated that it still expects to grow 20%, though.