Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Genesys Telecommunications (GCTI) -- Ignore unavailable to you. Want to Upgrade?

To: BJK who wrote (53)	3/8/1998 8:45:00 PM
From: Bobo	Respond to of 220

I am interested in purchasing some of this stock, do you think that this is still a good It really depends on your taste for risk. I would say that if you have a tough stomach, this is a reasonable entry point but I would not buy 100% of your position. You probably stand a 50/50 chance of averaging down at 25 or so. This stock has the potential to grow 50% / year for a long time, become an 800 lb gorilla, and become a 4 or 6 bagger (and make me alot of money in the process). The only problem is that the valuation reflect a good bit of optimism. You just gotta be prepared to see this in the low 20's if the market pukes and the teens if the company trips up. (Given the company's visibility, this is unlikely.) Sorry I sound so wishy washy, I simply hate recommending this stock because of the valuation. FWIW, the stock is about 16% of my portfolio and I am prepared to take this level higher if the market presents an opportunity. My average cost is about $27. I try to divide my portfolio equally into six tech companies I understand well. It's a simple diversification scheme but allows me to do my own research, listen to conference calls and utilize my contacts in industry. BTW, the reason I am into the stock now even with some concerns on valuation is the likelihood of expanding operating margins You could see this in Siebel early in 97 for a bit of a case study. GCTI's operating margins are about 10%. The company is capable of doing something like 30% once it completes investments that are necessary for growing sales, marketing and development. Once GCTI starts expanding its operating margins, the bottom line will grow at a compound rate to top line growth. 50% top line growth and margin expansion from 10% to 20% creates eps growth of 300%. Once GCTI does this, the stock will likely react, momentum investors will follow, and people not invested in GCTI will talk with words of spite. This is a thing of sheer beauty and IMO the panacea of high-tech investing.