Tech P/Es: The Meltdown Continues

On Feb. 7, The Times published this chart of leading tech stocks, showing how the stocks’ price-to-earnings ratios (P/Es) had declined from their peak levels last year. As the stocks have plummeted further, the P/Es based on analysts’ average estimates of 2001 earnings per share have continued to slide as well. Still, the big question is whether current lowered estimates for many tech firms are realistic. If earnings for 2001 turn out to be far below current estimates, stock P/Es that appear to be reasonable now may actually be far higher.

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Ticker 52-week Tues. Peak 2001 Stock Symbol high close P/E* est. P/E Ciena CIEN $151.00 $69.75 1,845 94 Yahoo YHOO 205.63 23.44 915 62 Juniper Net. JNPR 244.50 62.86 4,500 60 Siebel Sys. SEBL 119.88 41.50 446 57 PeopleSoft PSFT 53.88 32.69 325 56 Broadcom BRCM 274.75 53.63 556 40 Vitesse Semi. VTSS 115.69 43.56 221 39 Cisco Systems CSCO 82.00 24.00 189 37 Sun Microsys. SUNW 64.69 19.81 126 37 Texas Instr. TXN 99.78 30.00 103 33 Microsoft MSFT 115.00 59.38 79 33 Adobe Sys. ADBE 87.31 30.50 82 23 IBM IBM 134.94 102.59 34 21 Corning GLW 113.33 28.65 125 20 Gateway GTW 75.13 16.72 53 13 S&P; 500 1,527.46 1,257.94 32 21

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* Highest price-to-earnings ratio the stock reached in last year, based on the company’s trailing four quarters’ earnings per share

Sources: Bloomberg News, IBES International, Times research