View Full Version : undervalued?

07-12-2001, 03:10 PM
There were big headlines a few days ago about how Corning posted a $5B+ loss for the quarter. shortly thereafter I overheard several people marveling at the "catastrophe" and surmising that Corning must surely be on the brink of going out of business.

Obviously, the thing these people didn't understand is that the losses are due almost entirely to depreciation of goodwill, acqusition related charges and the recent phase out of "pooling of interests" accounting in mergers. its a paper loss only. All of the companies who followed an aggressive acquisition strategy are now posting these huge losses in large part due the plummeting stock market and NOT any fundamental instability.

Do you think that companies - like Corning, JDS-Uniphase, Applied Materials, Cisco, etc. - that had hyper aggressive acquisition strategies could now be undervalued because of public ignorance of accounting principles?

07-14-2001, 02:01 AM
I bailed out of JDSU at 17 & change, and from what I've seen of their financial reports, I still don't see it as undervalued. I can't speak to the other companies, but I'm going back to basics - value, P/E ratios, etc....even in growth stocks. Even after having been battered down, I've seen too many tech stocks that are too expected based on high hopes for future earnings. I don't know enough about fiber optics to know what to expect from long term revenue growth, or whether something will come along that makes the industry second rate. My stockbroker's eyes went up when I cut my losses with JDSU, which I bought because it was a "hot stock in a hot industry" (the Peter Lynch kiss of death...before I read "Beating the Street" and "One Up on Wall Street"). AFTER I read Lynch, I changed my portfolio around, and put my JDSU money on top of some other money I had in CHGO, a pizza restaurant with over 20 locations in several states. I know the company (Lynch again), and they've quintupled earnings per share the last two years in a row. I don't know a lot about fiber optics, but I know good pizza when I taste it. If you're a physicist, or have some specialized knowledge about the industry, more power to you. I know that after I bailed on JDSU at 17, it lost another 30% in a month and a half. As for the pizza stock...it's a lot less sexy, but it's up 25% in the same month and a half, and about 400% in the three years or so since I first bought it. As for me, I'm done with high P/E ratios and the "Bigger Fool" theory.

07-15-2001, 08:49 AM
You could do a lot worse than trading against the news.

Also, something that works way more often than it should, [ because itís so well known] is to buy the rumor and sell the news.

Or vice versa re GLW.

07-16-2001, 06:57 AM
Boris There is a synonim of "undervalued" = crap I.e. none would touch it with a ten foot pole...stinky poo