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Author: PhoolishPhilip Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 38  
Subject: Re: Risk adverse investor Date: 1/13/2002 10:04 PM
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delighted,

Someone from the Berk board posted this as a company to watch. Was it you? I've given it a quick once over and determined it to be somewhat undervalued even using very conservative assumptions. I do have a few concerns though. First, it is up over 40% from its recent lows. I'm not sure how much more upside there is in the short term. Second, the business seems to have deteriorated significantly over the past decade. ROE was in the high 20's to low 30's from 1991-1995, but dropped precipitously during 1996-97 and has since hovered in the mid-teens. Do you know what went wrong? Finally, net margins have been steadily degrading as well, falling steadily from the high teens to a recent annual rate of 5.8%. My concern here is that this deterioration may be a sign of deeper troubles. Has technology eroded a moat, increased competition, or made their services obsolete? Do you think they can turn it around?

Otherwise I am very attracted by the dividend and what appears to be an undervaluation.

PhoolishPhilip
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