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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Kerry Phineas who wrote (40951)	12/25/1998 2:56:00 PM
From: Jess Beltz	Read Replies (2) \| Respond to of 132070

Kerry, I disagree that "all companies should be valued based on one of the popular parameters, whether earnings, book value, ROE, valuable strategic or technological assets, etc." I do agree that ultimately earnings drive share prices, or perhaps it would be more accurate to say that growth rates in earnings drive share prices. I also think that the most important driver of the growth rate in earnings is the growth rate in sales, and there is the key point in our discussion; nobody knows accurately how internet presence will translate into changes in the growth rate of sales. That IS why i think valuing internet companies is utterly different from valuing companies outside of the electronic medium. I freely admit that analysts do overreact. I simply assert that it is not clear that any of the stocks in the Burke article that fostered this discussion are overvalued. I would also like to say that I had no premise that "we should do so with the internet companies but should take the opposite tact with the semiconductor equipment manufacturers" when it comes to valuation. Indeed, i assert that those of us who follow the sector do have an idea (1) of how to value such companies, that is we understand some (some?, most?, many?) of the issues surrounding the fundamentals of the industry, and (2) of how the market translates this information through some key financial data into assessments of the relative values of the share prices. Therefore, unlike the internet stocks, we do have an idea of where the share prices of key companies in this sector are going in the intermediate to long term. I again assert that i think Mr. Burke is incorrect in his assessment with respect to the stocks mentioned in the article. The main point for this discussion, however, is that my position is completely consistent with respect to the companies i follow. I simply refuse to make flagrant statements about how ridiculously high some share prices are when the only thing i can say is i do not have any idea what the prices of internet stocks ought to be. it's a pleasure bringing out key issues for discussion. jess.