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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Tim Luke who wrote (6606)	1/10/1999 1:32:00 PM
From: puborectalis	Respond to of 90042

Jan 07, 1999 Will Technolgy Stock's Start to Move Down? To get The Internet Financial Connection newsletter e-mailed to you for FREE, send an e-mail to ifc-request@mLists.net and write "subscribe" in the body of the letter. The last time I made a prediction about the direction of technology stocks was back in August of 98'. During the first wave of the technology sell-off, the NASDAQ Composite was at 1780. I had anticipated that the Technology Indexes, which include the NASDAQ Composite and the Morgan Stanley HI Tech Index (MSH) would break out to new highs by the end of 1998. A feat of which I was criticized by a few emails sent to me by readers saying, "Your crazy, the NASDAQ Composite will never go near that by the end of 98'". Well, the NASDAQ Composite barely touched my target of 2200 in 1998 and blew through my target of 720 for the MSH. The technology stocks have sprung to life as Microsoft, Dell, Intel, and Cisco lead the charge. Microsoft's market cap is about $35 billion larger than General Electric's. Let's look at Microsoft's earnings. They are expected to earn $2.35 in the June quarter of 99' and $2.81 in 2000. Microsoft always exceeds earnings estimates and for some reason, I think that will continue. let's just suppose Microsoft will earn $3.50 for fiscal year June of 00', instead of the $2.81 estimate. Going forward, that will give them a PE ratio of about 43, given their current stock price is around $150. Microsoft typically trades from 45 to 65 times forward earnings. So, their stock may have some upside left in 99'. If I add 30% on to the other stocks forward earnings estimates, which include; Dell, Intel and Cisco, I come up with PE ratios of 39, 24 and 42, respectively going forward. Many investors think they can beat the market by buying and selling stocks The reason why I added 30% onto each earnings estimate was to give a real world illustration of what PE multiples they are trading at. Historically, they tend to beat earnings estimates. Despite the fact that their PE multiple may look a little lofty, they are not trading a excessively lofty valuations to prior PE multiples. A couple of earnings surprises (on the positive side) and those stocks could possibly move 20% or more higher in the short term, even though they have all recently risen significantly. The reason why I am picking on the large cap technology names is because they are the ones that are pushing the Technology Indexes higher. All of those stocks could and most likely will go higher during the next 2 to 3 weeks, I am currently issuing a yellow signal on technology stocks in general. This means that you may want to hold off from purchasing technology stocks until a correction happens. If you do decide to buy shares of technology stocks, use caution! I think the NASDAQ Composite could realistically push up into the 2600 to 2700 range, within the next 6 weeks as investors rush in and push them higher. If the NASDAQ touches the 2600 to 2700 area, it should drift sideways to lower as the buyers of those technology stocks evaluate, reassess and ask, "have these stocks run up too fast?" What's classic about technology stocks is that they can move up and down, sometimes in sharp swings This is not a sell signal for technology stocks. Even if it was, investors must consider the consequences of capital gains taxes, tax brackets... etc. Many investors think they can beat the market by buying and selling stocks (trading), hoping to make more money. In most cases, the opposite is true. After capital gains taxes, commissions and bad timing, more money is usually made by buying and simply holding stocks. Warren Buffet is famous for his approach by simply buying and holding solid companies for long periods of time. What's classic about technology stocks is that they can move up and down, sometimes in sharp swings. People that buy these stocks sometimes quickly sell them after purchasing them because they get frightened of their volatility. They buy them back after they start to go back up. This is a classic mistake that many investors make and I have done the same in the past. Many investors tend to buy stock in technology companies that they know little about or simply do not understand. They feel good when it goes up, but then panic when it goes down. This adds to the volatility in the shares of many technology stocks. In short, enjoy the ride while it lasts. Technology stocks will move higher during the short-term, but the real question is, "For how long?" The answer, 5 weeks at the most. Mark Johnson Editor IFC

To: Tim Luke who wrote (6606)	1/10/1999 2:02:00 PM
From: Jim TenIron	Respond to of 90042

Tim, I picked up some IOM on the seventh. Could be a good turnaround/earnings play. Lots of shares short, good news, virtually no competition left, and...I'm hoping for very good earnings release on or around 1/21. Jim

To: Tim Luke who wrote (6606)	1/10/1999 2:06:00 PM
From: Don Pueblo	Read Replies (3) \| Respond to of 90042

I wouldn't touch it.

To: Tim Luke who wrote (6606)	1/10/1999 3:10:00 PM
From: Mike Perras	Read Replies (1) \| Respond to of 90042

Hi Tim: Like you I have some IOM, many are trying to keep it down that's for sure .. so far people seem positive about 4Q results on the 21st. For any Canadian fans, here's a pre Monday earnings report FYI .. INTERNATIONAL DATASHARE (IED:TSE $0.42) <http://www.datashare.net> The company has released 1999 2nd Qtr Results (ending Nov 30/98) this weekend which will be on the wire service Monday morning. Results are very positive and particularly so when you consider the past 6mths has been one of the worse times for the oil/gas industry in years. Sales for the 6mth period are $3.1 million and an increase of 156% over the previous period in 1997. The company has also achieved an increase of $841,800 in operating income over the prior period. The full report to shareholders is expected to be on the website by Monday but a few important excerpts are below: "IDC will no longer be presented to the investment community as simply an oil/gas service company. For the past 4mths we have been quietly working to create the basis for changing the way the investment and customer communities view IDC. A new, more proactive I/R program has been designed and the company has revamped its products and services marketing approach with a focus on Total Information Management." "This strategic acquisition (Docuserve) brings with it substantial expertise in high speed document scanning, indexing, and OCR as well as a wealth of major customers in fields other than oil/gas." "Possibly the most exciting news has to do with Intellectual Crystals... the company plans to joint venture the development of these products in order to maximize its revenues from this value-added service." Total revenues for the year ending May 31, 1998 were $4.7 million. After its slowest typical 6mths, the company is already well on it's way to surpass this number. A year ago when the company was still in the expensive software development stage and losing $100,000 per month, the stock was trading at $1.30 ! Cheers, Mike

To: Tim Luke who wrote (6606)	1/10/1999 4:10:00 PM
From: Sosmartinov	Respond to of 90042

There is no scenario that takes IOM much below current levels; at least no scenario that wouldn't take any other undervalued stock down. IOM has really figured out how to deploy the "Gilette" model and we'll find out 21 Jan but still will be lots of time for upside after the #'s bec of all the wariness from past hx.