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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (1097)	3/13/1999 4:39:00 PM
From: Patriarch	Read Replies (1) \| Respond to of 6531

I respect Jim O'Shaughnessy's work. I met him at a book signing once. You realize that Jim is a value-oriented guy. He looks at stocks that are trading at historical low multiples (mostly Price/Sales), and holds them forever. The above is a good strategy, but IMO, it must be used with more mature companies. For the most part, Jim does not take into account the company itself and what market it exists in. Jim looks at the numbers, nothing more. If you ever seen him on CNBC during one of those call-in Q&A sessions analysts do, whatever the question is, Jim goes back to the numbers. Don't get me wrong, I respect his analysis and know where he is coming from (I'm a statistician myself – numbers can't lie to me <g>), but one needs to look at the big picture regarding any stock. Looking at Johnson and Johnson and Philip Morris this way is helpful, looking at hyper-growth companies, especially tech stocks IMO, cannot be done successfully. Run a screen and look at tech stocks that can be considered value plays. More than likely most of them are falling behind the tech curve - hence the "value". This is something you can't equate on a screen. In sum, if you see a company with phenomenal growth, on average you're going to pay a likewise multiple for it. Just my opinion, I could be wrong <g> Pat

To: Raymond Duray who wrote (1097)	3/13/1999 8:35:00 PM
From: Keith A Walker	Read Replies (1) \| Respond to of 6531

Just a comment on stratospherically high P/Es. How about the converse of this phenomenon; the "in-the-dirt" P/E. Companies that have taken a beating, even with good earnings. I know, these are typically the value plays, but, you could also be trying to catch a falling knife. Example: Applied Magnetics (APM). The knife hurts, I caught that one hard. When I bought in, the P/E was about 8. Geez, there was a good reason the business was hurting. The point is that P/E should be viewed relative to a lot of other factors. Is 164 high for a P/E - you betcha. Is the market for broadband technology exploding - you betcha! The 'nut stocks will likely come down to reality, but, who knows when. The likes of Yahoo!, Amazon and AOL are keeping Wall Street happy with pipe-dreams for profits. That is the way a lot of analysts are most comfortable; they can never be wrong when the companies they track are in such a state of chaos that no one can figure them out. Keeps their credibility alive even in tumultuous markets like this one. Broadcom has strong profits, hence, when analysts get wind of a downturn the high P/E hurts. Seems like the bottom line on this stock is to just take the volatility in stride, play the options on the stock to make a little income, and get in as long as you can afford to go. Just my opinion. Regards, Keith

To: Raymond Duray who wrote (1097)	3/14/1999 2:49:00 PM
From: DownSouth	Respond to of 6531

Your points are well-taken, as are the ones of Patriarch and Keith. I can see that this thread will be an interesting place to lurk, though my ability to contribute will be rare. Keep up the good dialog. We are out here on the bleeding edge and all well-thoughtout opinions will be welcomed by this investor.

To: Raymond Duray who wrote (1097)	3/14/1999 7:05:00 PM
From: DownSouth	Read Replies (1) \| Respond to of 6531

This reply was more satisfactory to me than your multiple choice exam. ;-)) I just realized that you, Raymond, are the same person that posted his "thoughts" to me earlier. I found your reply much more satisfying than your "thoughts" and any response to my silly test. Thanks again.

To: Raymond Duray who wrote (1097)	3/14/1999 7:41:00 PM
From: Wizard	Read Replies (2) \| Respond to of 6531

Let me chime in for my $.01 1/2 cents (slightly less than $.02)... I think an investment in BRCM comes down to the answer to the following question: Will there be an Intel-like company born out of the broadband communications silicon market? If the answer is yes, BRCM will be a very successful long-term investment as I believe they are the most aggressive/hungry/cutthroat prototypical broadband silicon company out there and P/E's and PSR's really shouldn't be the focus if you are talking about a gorilla in the making. However, it is a high-risk bet to assume such. Certainly, BRCM is an expensive stock with incredible growth thus far but is it capable of sustainable hypergrowth? This is an impossible question to answer. The stock discounts oodles of growth but BRCM might just be capable of it. Personally, I believe in the importance of broadband silicon and so I am searching for an entry point for a long-term hold but I certainly wouldn't avoid it or buy it based on valuation.