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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1162)	1/31/1999 10:40:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 1722

Porc, >>I concede that the market quotation on IBM's shares is somewhat extended relative to the company's recent performance.<< I know we have somewhat different ways of valuing businesses, but I don't think recent snapshot performance of the 4th quarter is really significant. I do concede that most market participants move stock prices around for that reason though. I think IBMs main valuation problem is that they're not earning more now than they were 10 years ago despite the greatest technology run ever. You just have to wonder what's going to happen when this boom runs out of steam. And they have a much more leveraged balance to boot as a result of trying to make the EPS numbers and keep the momentum guys happy. In order to justify such a high PE, you really have to be growing your business pretty rapidly. That's especially true for a Tech company where you would think that the PEs would tend to reflect the greater business risk to some degree. I think your original recommendation of the stock back a few years ago was a terrific one. But I think the stock price has far outstripped the intrinsic value gain in the last year or more. Wayne

To: porcupine --''''> who wrote (1162)	1/31/1999 12:26:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 1722

Porcupine, Actually, the recent performance is greatly extended as far as quality of earnings reported goes, too. MB

To: porcupine --''''> who wrote (1162)	2/4/1999 9:13:00 PM
From: porcupine --''''>	Respond to of 1722

Not much boom in US budget for defense contractors Monday, February 1, 1999 By Laney Salisbury NEW YORK, Feb 1 (Reuters) - The major U.S. defense and aerospace companies are not likely to see their earnings or ailing stock prices blown higher by the military budget proposed on Monday, analysts said. The proposed budget for fiscal 2000, which begins in October, calls for spending to rise to $280.8 billion from $276.2 billion. It includes $53 billion for more modern weapons and $6.6 billion for a national missile defense system to fight ballistic missile threats. "This budget sends the signal money won't just dry up for programs but it is not by any means a windfall for defense contractors," said Richard Aboulafia, an aerospace and defense analyst at Teal Group. Aboulafia and other analysts put little weight behind President Bill Clinton's requests for an additional $112 billion between now and 2005 -- the first sustained increase in over a decade -- because priorities and programs are likely to change. "The budget is not making any strategic decisions. It is giving just enough extra money to programs to help them survive for the next couple of years," said Jon Kutler, defense analyst at Quarterdeck Investment Partners. Stocks at the top defense contractors on Monday were mixed following the budget news. Boeing Co. (Nyse:BA) was down 1/4 at 34-5/8 and Raytheon Co. (Nyse:RTNa) was up 3/16 at 55-15/16. Lockheed Martin Corp. (Nyse:LMT) 2-5/16 at 37-9/16. The past four months have been tough for the industry, whose major players lost nearly 15 percent in market capitalization over the last four months, said Kutler. The analyst blames the decline largely on the cost savings and writeoffs that came with a recent wave of consolidation starting to disappear from company balance sheets. "The goody bags are now running out," said Kutler. "The budget, though, is still positive for some companies, but only because it is an increase, not a decrease." One major plum in 2000 for defense contractors is increased spending for the National Missile Defense system, which involves Boeing, Raytheon and Lockheed Martin. Boeing said it expects revenue from the system to increase to a little over $1 billion in 2000 from $600 million in revenue last year. If the system were deployed -- a decision to be made in June 2000 -- Boeing could see revenue grow another $1 billion by 2004. Raytheon forecast its revenue to expand by 2.5 percent to 3 percent annually starting in 2000 if the new budget -- and that beyond -- were passed. Raytheon provides ground-based radar for the missile defense system. Lockheed declined comment. The $53 billion in weapons modernization also includes building eight new ships in 2000 as well as 36 F-18E/F fighter jets made by Boeing and six F-22 "stealth" fighters and 10 F-16 fighter planes from Lockheed Martin. Quote for referenced ticker symbols: RTNa, LMT, BA © 1999, Reuters