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Technology Stocks : Dupont Photomasks (DPMI) -- Ignore unavailable to you. Want to Upgrade?

To: Duane L. Olson who wrote (318)	3/3/1998 5:11:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 955

"Quarter to quarter decisions detract from solid long-term investment" is actually a relatively profound statement that I wholeheartedly agree with. In fact, I have been buying a VERY mundane non-tech company just because of what I think the valuation will be in 3 years. In doing a present value calculation, I think looking out over the valley is OK so long as you do two things in the calculation - stick a "valley" from time to time in your earnings stream, because that is indeed what happens, and put an extra discount factor with respect to the earnings stream say ten or more years out, to allow for the possibility/probability that we will have a new technology that displaces DPMI. Let me know what you get - it won't be $69. As far as the poster who is worried about Korea is concerned, the correct question is not whether there will be less semi-equipment purchases from them (there will be less) but whether they will design fewer chips with the equipment they have. I suspect there might be some erosion in mask demand but nowhere near the erosion in semi-equipment demand. As far as earnings goes, I think the combination of Asian problems and additional depreciation charges related to new facilities (while they are not at capacity), might get earnings down to near $.40 over the current and next quarter. However, the recent Electronic News interview, if my memory serves me right, had the CEO predicting 15% growth in sales in the next fiscal year, which would generate a quick recovery in earnings. In my opinion, a CYCLICAL LOW of $.40 per quarter should be capitalized at a MINIMUM 20 times earnings or $32. That is the downside risk that I see. In fact, on cyclical growth stocks I could even see a p/e on cyclical low earnings of 25. But the corollary is that cyclical peak earnings should be capitalized at a lower p/e such as 15 -18. Comments please?