cchamb, I understand your points. I'm quite sure JDSU, like all the tech highfliers, is indeed being swept up in the frenzy.
It's tough to justify any valuations using absolute terms, even Cisco's. In my opinion, all you can do is evaluate companies on a relative basis. When I look at the 40 or so tech stock highfliers that I follow closely, I see JDSU as having at least the best chance to someday do what needs to be done to justify its valuations. I don't think anyone can determine a mathematical target at this point.
Right or wrong, the market is awarding higher multiples to the newcomers, and not just relative to the old economy stocks but even to the "old" tech giants like Intel, Cisco, and Microsoft. Is it justifiable? Certainly not under any historical theories.
As a long time investor and an accountant for many years, I a a researcher and analyzer at heart. I sometimes long for the days when you actually needed to be smart and do research and apply valuation techniques. But the reality of today's world is that as more and more "little guys" come into the world of investing, the intelligence/knowledge per investor drops significantly. Yet their dollars have just as much impact as ours. If they are going to buy, even if their research consisted of nothing more than looking at the December issue of Money magazine and seeing which stocks returned 800% last year, the stocks they buy are going higher. And quite frankly, they ain't lookin' at PE's. Unfortunately, this behavior has been positively reinforced by resulting in spectacular returns.
I have no illusions about what's making these stocks fly. I just hope it continues for a few more years. Then I can retire 15 years early and not give a damn.