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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (46483)	5/10/1998 10:35:00 AM
From: Sector Investor	Respond to of 61433

Interesting? LU could still triple and not match CSCO's PS ratio. techstocks.com

To: The Phoenix who wrote (46483)	5/11/1998 10:24:00 AM
From: Leeza Rodriguez	Read Replies (1) \| Respond to of 61433

PSR comparisons between LU and CSCO: I have been tracking hi-tech PSR's for a a couple of years and my findings are that the allowed PSR in the marketplace is primarily a function of margins and secondarily a function of sequential sales growth and LT debt. The gross margins at LU are in the low 40's% , while CSCO's gross margins are ~ 65% . Thus, the two stocks should NOT trade at PSR's even remotely close to each other. Don't get me wrong, I love LU and think it is the blue chip of the decade, but don't go around thinking that LU should trading at a PSR=4 or 5. IMO, they would need gross margins closer to 50% to achieve that kind of valuation. Leeza Rodriguez