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Technology Stocks : Semtech (Nasdaq:SMTC) -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Bond who wrote (705)	11/30/1998 10:33:00 AM
From: John Morrison	Read Replies (1) \| Respond to of 1225

That earnings estimate increase will be worth some points. This morning the little guys are selling and the big guys are buying.

To: Jeff Bond who wrote (705)	12/2/1998 11:13:00 PM
From: Stu Bishop	Read Replies (1) \| Respond to of 1225

Jeff, re: "In the conference call, earnings growth was anticipated by the company to be +5-8% for two quarters and +2-4% for two quarters." If I use the high side of these estimates, to be optimistic, meaning sequential growth the next four quarters of 8%, 8%, 4%, and 4%; the resulting annual growth for those four quarters is 1.08 x 1.08 x 1.04 x 1.04 = 1.26. In other words 26% growth. In fact, Zacks is estimating 24.4% annual growth for the next five years. Zacks is also estimating $0.88 for the current FY and $1.06 for next FY, for 20% growth next year. What's my point? This company grew earnings from $0.60 to $0.98 between FY(1/97) to FY(1/98). Two years later, even if they made $1.2 next year as you predict, the earnings growth will have slowed to roughly half what it had been. If this is true, then a PE of 35-45 is high. PE=25 might be more reasonable. I know earnings growth isn't everything. You and others have made many wonderful points such as 50% margins, for example. But are we being too optimistic? With a PE of 25 and next-year earnings of $1.20, I get $30, or current price. If the stock ran up another 20% in short time, wouldn't it be well overvalued? Sorry to sound so bearish, but I had a 60% profit at the October 97 peak. At that time it was rising at what I thought was an unsustainable rate, but I hung in there. In retrospect, I'd call it greedy. You know what happened next. A year later, I finally got back to even; now I have 42% profit in a month. THIS STOCK HAS DOUBLED IN TWO MONTHS! Is history repeating? I hate to let this one get away ... again. IS IT TIME FOR A REALITY CHECK? stiiiiiiiiiiiillllllll lllooooooonnnnnnnggggggg....... Stu B