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Technology Stocks : PMC-Sierra (PMCS) -- Ignore unavailable to you. Want to Upgrade?

To: Danny Chan who wrote (1938)	7/17/1998 10:48:00 AM
From: Bobo	Read Replies (1) \| Respond to of 3818

<<I think lots of people think PMCS over-valued based on the published estimates. The 99 estimates has not been revised high enough. If they can grow core networking revenue at better than 40%, the earning should follow as well. Now 99E is only at 1.37 or 17% above 98E. Anyway, 98 to 99 should be at full blast.>> I have always thought the stock price was a bit rich but have picked a 50% position today. I may have spend my bullet too early but view this as THE merchant chip vendor the comm space. IMO it merits a Price to Growth valuation comparable to Cisco and other leaders. It seems that 1.37 is quite a bit low for 99 unless margins really compress. To me, it looks like 1.15 - 1.20 this year and (assuming 40% growth in 99), 1.65 is reasonable. <<Is there anything from the CC that could be negative?>> Guidance was for seq lower eps because of more pumping of r&d (to 22-24%) and anticipated falloff in legacy. Mo-mo player hate to see this. But IMO this will only separate PMCS from the pack in the next few years. Look back at Cisco's decision to increase r&d several qtrs ago and the product cycle strength it has created.