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 : Computer Network Technology (CMNT) -- Ignore unavailable to you. Want to Upgrade?

To: Craig Stevenson who wrote (366)	5/20/1998 8:54:00 AM
From: Craig Stevenson	Read Replies (1) \| Respond to of 750

Neil, Brad, and ALL: Am I reading the Reuters press release correctly? The way I figure it, CMNT did $100 million in 1997, and they want to grow that by 25%. That puts them at $125 million for 1998. If they want to return 15% to operating earnings, that would be $18.75 million. Figuring 22 million shares outstanding, that translates to .85 per share. (Granted, Mr. Barnum's response indicated that this would take 18 months to achieve.) What is a fair multiple to use for a company like CMNT? More than 6? <g> Craig

To: Craig Stevenson who wrote (366)	5/20/1998 9:45:00 AM
From: Neil S	Read Replies (1) \| Respond to of 750

Craig, That is very interesting and i think the sign we were looking for re top line growth and incremental eps gains. The fact that they came out in public and outlined their goals is bullish [and it is also measurable] .<g> <<"The short-term goal for the company is to get half way to the goal of a 15 percent operating margin in the fourth quarter this year," he added.>> That would be 7.5% by Q4 vs 1.7% Q1 [operating margin] so eps can be expected to increase sequentially. However, i am curious about the top line as 25% growth year over year [ 97.8 x 1.25%] = $122.3.m. Q1 revenue annualized [31.2x4] = $124.8 which seems to imply no sequential top line growth on a quarterly basis. If i recall correctly your CC notes mentioned sequential top line growth in FY 98. My instant drive-by analysis is that they think they can potentially beat $125m top line. Underpromise/ Overdeliver. Neil