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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Electric who wrote (7332)	3/25/1998 12:14:00 AM
From: Chris	Respond to of 42787

Briefing.com 3Com's stock General Commentary Given the current environment, you have to expect 3Com's stock to rally on Wednesday despite company's horrendous earnings report. This is an insanely bullish market in which fighting the tape is a losing game... Facts don't matter, as proven by Tuesday's trading in Quantum... Company warned that revenues for the quarter will fall by 20% sequentially and that earnings would be breakeven or slightly positive vs. estimates for a gain of $0.25... CEO noted that company doesn't see a significant improvement in sales or earnings until at least the September quarter... The stock gained 5/8 and the industry posted huge gains... After the close, COMS reported a gain of $0.02, down 95% from year ago levels... Revenues for the period fell 15% to $1.26 mln... Gross margins tumbled from 50% to 43%... But don't expect anyone to care... All that matters nowadays is that the company has prospects for growth sometime before the new millenium... And 3Com loaded its press release with talk of new product offerings, new alliances and a new inventory channel system... Make no mistake, these are positive developments which should result in higher earnings/sales growth down the road... It is also important to note that the company faces an increasingly competitive landscape across product lines which will keep pressure on margins for many quarters to come... Forgiving market will focus on the positive and the stock will probably extend its recovery rally over the near-term... Stock, which is close to breaking out of a 5-month consolidation phase, could climb as high as 45 over next 6-months... But the longer-term outlook for this company remains clouded by an increasingly competitive market and an uncertain earnings outlook. Another reason for market to overlook bad 3Com news, Microsoft announced in conference call that it expects to beat street estimates for the current quarter by 10%... Street had been looking for a gain of $0.44... Sees Q3 revenue growth of 17%-18% over last year... Then went on to say growth over next few quarters will slow and that it faces increased competition from Oracle, Sun and IBM... Also noted that Asia remains weak but no evidence of accelerating weakness... But street pooh-poohing cautionary comments as typical Microsoft... Stock up nearly 4 points in after hours trading at 88 1/4. Combine Microsoft's better-than-expected news with 3Coms positive forward looking tone and it's shaping up as another banner day for the tech sector. Earnings reports due out later this week include Broderbund (W) and Adobe (Th)... For a complete run down of companies scheduled to report, see our Earnings Calendar.