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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: Doug who wrote (4955)	4/15/1999 1:23:00 PM
From: Just_Observing	Respond to of 6021

Doug, I have no idea how NETA is going to perform. That's why I am suggesting that the only way to play this stock is to set up a call spread with ratioing. That way you risk very little money while having significant upside. Just buy some longer term calls (leaps if you prefer) and spread them with a ratio such that you are risking less than a dollar a share. No need to risk $15 for this stock though it seems hard to believe it can go lower. But if I bought the stock here, I would sell the June 17.5 calls for around $2 (that's where they are trading). If the stock goes up, I have made $4.5 on $15 - not bad. If the stock goes down, I've reduced my cost to $13. Looking back on this stock (which is the only thing I can speak of), Larson needed just a bit of courage at the conferences towards the end of Feb. 99 (RSFB Feb 21-23, I think). If he had just issued a caution then, the stock would now be at least 10 points higher if not 15. But Larson was accustomed to giving out good news and he must have pulled out many quarters in the past. This time, however, NETA was simply too big with expected revenues of 285 Million. I don't know what I would have done had I had been in his shoes. Bill Larson is the victim of his own success. Now the lawyers are on the attack knowing that the lower the price stays, the more clients they will get. All of NETA's famed PR will not work against the 20 or so law firms whose business is generating paper. And in any case, NETA's credibility is shot. Larson will have to build up some credibility if he hopes to win any analyst backing. That means at least two quarters of solid growth. And very careful handling of analysts. And going easy on the rosy press releases for a while since people in their cynicism will tend to invert them. Time is the great healer and NETA needs all it can get. But time is also the greatest enemy of option premiums. That's why I cannot recommend sinking big bucks without hedging your option positions. Good Luck