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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Richard Forsythe who wrote (3992)	1/23/1999 12:03:00 PM
From: peter grossman	Read Replies (3) \| Respond to of 10309

If growth stocks trade at some relation to their consistent growth rate, then it makes sense that the price will drop when both the growth rate and the consistency fall off. But how much? Down 17? Ubiquitous stupidity! As a long term holder, and now of more shares, I am a bit concerned by this apparent blip. Because WIND always reports a penny or two above estimates, missing by a penny or two will result in a quarterly earnings growth rate of as small as 25% (.27 vs. .215), versus the customary 40% +. So, it makes sense that the price should fall some from very near all time levels. But there's no fundamental change in the business prospects. Nothing happened to digital cameras or cable modems or printers or internet appliances or... There's no change in next year's earnings estimate of $1.16. So now WIND trades at 27x next year's earnings. And there's little reason to believe that WIND won't return to beating estimates. I'm a little disappointed that they might not beat estimates 21 straight quarters, but 20 out of 21, with one possible very near miss ain't bad. The April quarter promises to restore very high quarterly year over year growth rates because however delayed, incremental I2O profits will be compared to the lowest earnings quarter of the year. If the underlying growth rate "returns" to 40% in the April quarter, and I2O profits add .02 to the bottom line, the next quarterly year over year growth rate will balloon .. and the stock will go up at least 17?