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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: George A. Roberts who wrote (1102)	9/30/1998 12:31:00 PM
From: Kenneth E. Phillipps	Read Replies (2) \| Respond to of 14638

If you're not going to use PE and PSR to value the stock, what are you going to use? The value of a stock reflects the ability of the company to earn money over the long term, nothing more. If you're not going to use PE, then buy some internet content stocks with no earnings. The market gets hysterical in cases like this but you cant forget about earnings.

To: George A. Roberts who wrote (1102)	9/30/1998 12:47:00 PM
From: Jeng Chiu	Read Replies (1) \| Respond to of 14638

I agree that the trend is buy the biggest at whatever the cost. So what if if CSCO trades at a ridiculous amount, they're the leader right? CSCO has a much bigger downside in my opinion b/c they're expected to grow earnings by 30% on an annual basis. If they incur a hiccup along the way, watch out. Institutional Investors love CSCO, more so than any other company this side of DELL. But those same buyers can be extremely capricious, especially when they are disappointed. My point is that whether NT is a good investment or not depends on many variables, most of which are still unknown. But assuming everything remains constant (a big assumption), NT is trading at a VERY low multiple relative to the industry. A low multiple is a double edged sword. It's either a great deal because it's trading closer to what they actually earn. Or it's a bad deal because no one wants to touch it and therefore wont move up in price. Whether it's a good investment or not is Subjective, but the P/E is Objective, it's a direct calculation of price/earnings. At 16 times earnings the P/E is low for the industry.