IBM Message Board - Msg: 4299544

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Technology Stocks : IBM

IBM 312.75

+0.7%

3:59 PM EST

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To: David Lee Smith who wrote (3003)	5/2/1998 7:27:00 PM
From: Bill Martin	of 8218

Re: If you believe that a stock is fundamentally worth the discounted present value of its future cash flows (dividends)... Dividends aren't equivalent to cash flow when a company is generating more cash than it takes to run the business David -- dividends are a subset of what you want to look at. I think you'd also have to include excess cash flow that IBM currently uses to buy in stock and to buy technology companies in your calculation to arrive at a "fair value". Think about how just applying your discounted dividends approach to Microsoft would result in a $0 fair value and you'll see it is not a valid approach in itself. Many, many technology companies pay no dividend -- IBM is probably more the exception than the rule. Bill

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