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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Tim McGee who wrote (27638)	2/4/1999 5:51:00 PM
From: Dennis Eckert	Respond to of 45548

Tim, I'm not taking anything away from your analysis, but would just try to elaborate further on your 'fear leading to technical havoc in the stock' a bit. I like to technically analyze these sorts of things and so will throw out just an opinion (in other words, how could anyone hope to find and interview the major sellers so we all knew what factors were driving them to sell? When I was a reporter, it was pretty easy to know what happened cause the policer officer would say of a head-on traffic accident that the car in the northbound lane swerved over the center line and struck the car in the southbound lane) When I was taught the dynamics for stock pricing dynamics, I was introduced to three 'people' in the market. Prices rise cause bulls are greedy enough to pay a premium to sellers. As the bull demand surges stronger, the sellers demand an even higher premium and prices advance. However, that's only two people in the market. The third are the folks sitting on the side, and at some point, they jump in also cause they don't want to miss out on the action. And on the cycle goes. Until it reaches some saturation point. Reverse most of the words above, and you have the same three 'people' when the price drops. So, on the downside, fear of a larger loss drives the new buyers to sell ... greed continues to fuel the people shorting the stock as it continues to fall and some of the spectators on the sidelines -- seeing the victim stock fall temporarily to its knees -- jump into the fray and try to drive it further down so it's laying on the sidewalk. I guess this is why the market is so fascinating 'cause there are so many ways to make money at it. I mean, if we didn't have anyone willing to sell stock, however could a stock continue to go up? After all, the 'inventory' of stock is limited at any given time.

To: Tim McGee who wrote (27638)	2/4/1999 7:39:00 PM
From: Moonray	Read Replies (1) \| Respond to of 45548

3Com Falls for 2nd Day Amid Concern About Price Cuts Santa Clara, California, Feb. 4 (Bloomberg) -- 3Com Corp. shares fell 8.5 percent, sliding for a second day, amid concern about falling prices on the No. 2 network-equipment maker's popular PalmPilot hand-held computer and other products. 3Com fell 3 3/16 to 34 3/16 in trading of 28 million, making it the second-most active stock in U.S. markets. The stock fell 15 percent yesterday, its biggest one-day percentage drop in almost two years, and has lost 33 percent of its value since trading as high as 51 1/8 on Dec. 23. The company cut by 19 percent the price of its most popular PalmPilot device, 3Com's fastest-growing product line, which accounts for about 10 percent of revenue. Analysts also think prices are falling on 3Com's analog modems and computer-connector cards, which together contribute about half the company's sales. ''Their business is very susceptible to price declines given the markets they're in,'' said Scott Heritage, an analyst at Warburg Dillon Read, who rates 3Com ''hold.'' Heritage and other analysts said the cuts, together with traditionally slow January 3Com sales, mean the company probably has booked less than half its expected fiscal third-quarter revenue of about $1.5 billion. The quarter ends in February. ''This quarter will be more back-end loaded than usual,'' said Martin Pyykkonen, an analyst with CIBC Oppenheimer who rates 3Com ''hold.'' Strong Holiday Sales 3Com usually has strong sales of consumer products such as its PalmPilots, modems and connector cards in November and December. Those sales tend to fall off after the holiday buying season, Pyykkonen said. Prices on several 3Com adapter-card models are down 15 percent from November prices, according to a report issued yesterday by analyst Stephen Koffler of Donaldson, Lufkin & Jenrette Securities. Koffler, who rates 3Com ''buy,'' cut his earnings estimate for 3Com's fiscal third quarter ending in February to 34 cents a share from 36 cents. He estimated that adapter-card sales make up about 20 percent of 3Com's revenue. The company's gross margins, or the percentage of sales left after subtracting production costs, will probably narrow because of the price cuts, Koffler wrote. 3Com's analog modems are also coming under increasing price pressure, Pyykkonen said. Santa Clara, California-based 3Com is expected to earn 36 cents a share in the quarter, the average estimate of analysts polled by First Call Corp. o~~~ O