Asian Flu Portfolio #2

Cabletron System is a leader in providing high performance computer networking products. Book value $7.69 - total debts = 0. Currently trading at less than twice book. PSR equals 1.6 - for this size of company this equals a very attractive valuation. Trading at 52-week low or 70% below its high of year. Has around $3/share - is cash instruments. There are 23 analysts that follow CS - 90% have it rated a hold. This makes our opinion Bullish. Sure the company has stumbled and sales and earnings may slow, but give me a brake. This company is being treated as if Chapter 11 is just around the corner. Next earnings due out December 23. The street anticipates the end of the world. We believe that at current levels there is limited risk. We intend to monitor CS for percentage gain performance. In our opinion, Wall Street is usually wrong. They buy when they should sell and sell when the should buy! This opportunity has been affected by slowing sales and earnings, year end tax selling, the Asian Flu garbage and overly emotional money managers. Company #603-332-9400.

Western Digital Corp. The company designs, manufactures and sells hard drives for use in computer systems (notebooks, desktop, workstations and LAN server systems). Book value after announcement write-down around $7.00. Has no debt and $2.00 cash. Currently trading at its 52 week low, or 72% below its 52 week high. Trading at twice book and only about 1/3 of sales. The analysts - all 16 of them - have run for cover. This is Bullish in our camp. Sure earnings next year may be .40, but if you wait for this to happen, the stock will have already doubled. We know WDC has inventory and pricing pressure, stiff competition, and must deal with the transition of MR Head Technology. In our opinion, Wall Street should be buying, instead they are selling. At 30% of sales, twice

Broker Contact for WDC and CS Greg Nelson at 1-800-269-9460