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Technology Stocks : Xilinx (XLNX) -- Ignore unavailable to you. Want to Upgrade?

To: A. A. LaFountain III who wrote (2316)	4/28/1999 9:46:00 PM
From: schlep	Respond to of 3291

Tad- very clear this time. I understand your calculations now (as well as reminded myself to half the trailing earning due to the spit :-) ). While I understand your philosophy of not using the short term growth rate compared to most recent rates, we differ on two points. It has been my opinion and experience that many people are willing to look at not past 12 months earnings, but next 12 months earnings. Secondly, for the past few years, many investors and fund managers seem willing to pay higher p/e's than the straight conversion from using the growth rate number. So, my difference of opinion boils down to (including an slightly higher expected growth rate of %27 on top of my current years estimated eps of $1.25 x 1.2 premium of future growth => $40.50 target price. Then again, our philosophy differs in another important place; why use the 5 year growth rate rather than the shorter term (1-2year)? There is plenty of time to adjust your position in your investment, even enough to lock in the higher short term growth at the expense of short term gains. Using ~32% near term growth rate that then produces target price of 1.25x32x1.2 => $48. Of course premiums on profitable companies (not internet co's) can reach / trade as high 2x growth rate x1.25x32 => $80 as a high of the next years trading range. This inflated target price I agree would be of more interest to those more willing to take the short term gains. Even with your 23% growth x 1.25 x 2 trading range would reach $58 placing us with >25% potential. Just food for thought, I have respecfully enjoyed the discussion. Schlep

To: A. A. LaFountain III who wrote (2316)	5/2/1999 4:13:00 PM
From: Lucinos	Read Replies (1) \| Respond to of 3291

I believe we also need to include the inflation of stock's PE in the recent years into consideration. The people have been spoiled by the recent years of booming in the stock market, and the money is pouring into the market at an increasing rate annually. The inflation of stock prices is the by-product of this phenomenon and is becoming a more important factor to affect the future PE of stocks. Without putting this factor into calculating, there is no other way to justify the high PE ratios given to most of the internet stocks. Although there is no easy way to formulate this human factor into simple equations, we can not ignore this factor at this moment unfortunately. From my perspective, the high PE for the internet stocks is spreading from pure internet stocks to the telcom and datacom industries, and it is gradually expanding to some of the semi companies that provide the communication related chips. I believe as long as the bull market is still running, there is no reason not to accept a high PE for an internet related stock even for TXN, ALTR and XLNX. I also agree discipline is very fundamental. However, the discipline is only useful when it is based on a good system with a solid foundation. A system, even though it is working perfectly in the last 20 years, is not good enough if it does not include the human factor into consideration. For instance, a people without good discipline bought XLNX at 150.00 in 95 is still making good money (with 80% gain). Is it due to the annual growth of XLNX, or is it due to the inflation of valuation of stocks. I believer the latter one is playing a more important role in the last 6 months than anything else. If you think XLNX should be avoided at this moment, than it is equivalent to you are predicting the ending of the BULL market. However, is it really true that the BULL market is going to an END. Lucinos