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

To: joe who wrote (18509)	6/30/1998 12:39:00 PM
From: jim bender	Read Replies (2) \| Respond to of 45548

The Wall Street Journal Interactive Edition -- June 30, 1998 Computer Networking By LEE GOMES Staff Reporter of THE WALL STREET JOURNAL Doing a standout job covering computer-networking stocks last year involved supplying correct answers to a few big questions: Will Cisco Systems continue to dominate the industry? Will 3Com or Cabletron stumble? Will Bay Networks have a late-year rebound? The three top All-Star stock pickers in the sector earned their standings by answering "yes," "yes" and "yes." Even then, it was hard to make any money. Of the three, only David Takata, 35 years old, of Gruntal managed to generate a positive return, and it was only an estimated 4%. But then the typical computer-networking stock picker actually lost 31% -- the second-worst performance (behind precious metals) of the 50 industry groups covered in the All-Star survey. Mr. Takata knew enough to keep recommending Cisco in the spring, even when an industry slowdown caused the stock to drop to nearly $30 from nearly $50. It rebounded nicely, of course, ending the year at nearly twice that level. But there were some nail-biting weeks while it was unclear whether shares would recover. In addition, Mr. Takata spotted some opportunities that others missed. For example, he began the year with the belief that Internet service provider BBN was likely to be a good acquisition target for an expansion-minded telecom company. He was proved right in May when GTE agreed to buy BBN for $616 million. Mr. Takata then downgraded the stock to a "hold," locking in a 28% return based on BBN's price at year-end 1996. Mr. Takata, a four-year veteran at Gruntal, is modest about his prescience. "It was an obvious recommendation," he says. "They were one of the top-tier service providers, and I liked their emphasis on the corporate marketplace rather than the more trendy consumer market." The second-place stock picker in the sector was Luke T. Szymczak, 35, of Prudential Securities; Tim Luke, 31, of Lehman Brothers came in third. For this year, all three share the same familiar pick: Cisco, the industry titan, which they agree shows no sign of slowing. "If anything, they are growing their lead," Mr. Takata says. In fact, Cisco's strength against the competition is one reason the three analysts are, for the most part, refraining from recommending most other computer-networking stocks. There are some exceptions. Mr. Szymczak thinks Fore Systems could be poised for a new growth spurt later this year because of some new products. Fore was also the subject of takeover rumors earlier this month. In May, Mr. Luke was recommending Bay Networks again, this time as a possible acquisition candidate. For his part, Mr. Takata sees another BBN-style opportunity in PSINet, an Internet-service provider. Mr. Takata says the company may also be an acquisition target, possibly for some newly deregulated foreign telecom company looking to expand. When they aren't picking stocks or looking at schematics of networking routers, the three networking specialists are all part-time jocks -- Mr. Takata with basketball, Mr. Szymczak with bicycles and Mr. Luke with soccer. Of course, all of them complain they don't have enough time to follow their bliss. "This can be a real burnout job," Mr. Takata says with a sigh. Estimate Accuracy -- (of 25 analysts in group) Name Honors Firm Factor Farrokh Billimoria Hambrecht & Quist 0.63 David Takata * Gruntal 0.65 Mary Henry 2 Goldman Sachs 0.68 Joseph J. Bellace 2 Merrill Lynch 0.70 Paul Weinstein 4 PaineWebber (DB) 0.74 Stock-Picking Skill -- -- (of 25 analysts in group; median return -31%) Name Honors Firm Return David Takata * Gruntal 4 Luke T. Szymczak Prudential Securities - 1 Tim Luke Lehman Brothers -12 Peter Swartz Salomon Smith Barney -16 William Becklean 3 Tucker Anthony -16 Honors refers to the number of years an analyst appeared in the All-Star roster. *Winner in more than one category