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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: joe who wrote (15135)	4/4/1998 2:09:00 AM
From: thomas johnson	Respond to of 45548

Coms is at a bottom? Look, the fact they went up after earnings is a plus in the companys concern for stock price. Instead of dropping from $37 to $28 in one bounce, they chose to do it over several months. The best way to play is long and short daily. The only risk is watching your equity slowly drain away. What Ive been doing is shorting @ around 10 am and covering @ 1550 pm. Good for .50 most days.

To: joe who wrote (15135)	4/4/1998 2:32:00 AM
From: Andrew	Read Replies (1) \| Respond to of 45548

Joe, I think with COMS, you have to believe in the network/internet sector as part of the next major revolutionary trend of this century, and of the 21st century. If you don't believe this, then I don't think you should be in techs long term - you won't have the conviction that you'll need for the long term. Buffet style strategy is harder to apply to tech stocks. I agree with all of this. My problem is not with the networking industry, which I think is a virtual no-brainer. You know the analogy about the only people who got rich during the gold rushes were the ones selling the pick-axes <g> However, I don't think you can extend this blindly to ALL networking companies. If I'm trying to maximize my return on investment, I want to pick the companies who get the best return on THEIR investments. I also try to pay a price that makes sense. It seems to me that you should seperate your evaluations of any stocks (including techs) into: 1) Am I wildly excited about this company's future sales prospects, and 2) In the process, are they likely to make really outstanding profits from those sales. Buffett and accounting only come into play at step #2 (And for me, COMS no longer passes either test) 2) I'm not so sure about that low profit-margin argument of yours. Look at the box-makers like DELL and CPQ (until it had a blow-up). Successful low margin companies. Yes they've been fantastically successful. But as they spiral down into ever more vicious price wars, will those thin margins survive? I think CPQ, DELL or COMS are much more likely to post losses sometime in the future than is, say CSCO or MSFT. In a strong economy, commodity companies look great. If things get ugly, higher margin businesses are more likely to weather the storm gracefully. (For the record, I really admire Dell's execution. And it's up 300% since I narrowly decided not to buy it <g>) Anyways, I didn't really intend to argue investment religion, I just wanted to point out how unfaithful I was being to mine! <g> 3) COMS is not just a low-margin company. Next month they'll be coming out with their gigabit switch router. It will be interesting to see how the market sees this product. Plus, COMS has other higher end products that they are consistently coming out with. This is one of the things I keep telling myself. But you can't get away from the fact that over 50% of their business is in NICs and modems. Look at it this way: if you were a fabulously wealthy guy who wanted to buy a tech company, would you choose a NIC and modem company (even the best one!)? Given the prospects, I wouldn't. It's just not an attractive looking market. You were implying above that hopefully COMS will diversify away from these low margin products. The fact that they have to is exactly the problem. This company needs to diversify away from it's core businesses! Thanks for your comments...I am just coming around to remembering that I'm only supposed to bet large sums of money on companies that I'm wildly enthusiastic about. COMS does not fit this description for me. Sure things could get better...but I have no conviction. Now it's just a matter of going through with it! <g> Andrew