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Technology Stocks : Emulex, What Prospects? -- Ignore unavailable to you. Want to Upgrade?

To: George Dawson who wrote (72)	1/25/1998 6:13:00 PM
From: Thomas Scharf	Read Replies (2) \| Respond to of 788

How do you calculate an average PE? Not only are you working with a continuously changing number, but the period in question includes a year with negative earnings. In any case, much of that is ancient history. What is important is the recent results and future prospects. BASELINE (which I believe uses First Call estimates) shows a 120% rate of earnings growth for fiscal '97 and estimates increases of 155% for '98 and 79% in '99. The current PE is 26.5. Not bad for that kind of growth rate. Baseline is only showing 3 quarters of future quarterly estimates, so I plugged that and the last 3 quarters of trailing earnings into the Motley fool PEGulator and came up with a PEG of .256 whcih makes EMLX a screaming buy at current levels (a PEG below .5 is considered a buy signal). With the huge potential for fiber channel, I think the '99 estimates may be too low. One indication I have in favor of fiber channel comes from a friend who works for a manufacturer of high performance RAID drives. Their original strategy with the latest product had been to build it as fiber internally but have the early version come out with a SCSI interface, adding an external fiber channel interface later. They have scrapped that idea and recently introduced the product strictly as a fiber channel system. I bought EMLX at around $15.5 about 6 months ago. While I'm not happy with the short term performance, these estimates and the company's solid balance sheet make me perfectly comfortable with EMLX as a long term investment. Thomas

To: George Dawson who wrote (72)	1/30/1998 11:34:00 AM
From: Wolfgang Schuler	Read Replies (3) \| Respond to of 788

"3. The value of the deal with Groupe Bull is unknown. I read recently that Groupe Bull has a general policy of not disclosing or estimating how much product they order." In our experience, BULL does not make commitments. Their attitude is that if they do an OEM deal with a vendor then the vendor's benefit is that they can mention the name BULL.