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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked

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To: bob who wrote (87489)	1/21/2000 1:47:00 PM
From: bob	Read Replies (1) of 90042

Friday January 21, 1:23 pm Eastern Time Hi-tech stocks not inflated by bubble-CSFB analyst MILAN, Jan 20 (Reuters) - The value of high-flying high technology stocks is not inflated by a speculative bubble, Credit Suisse First Boston's chief U.S. investment strategist Michael Mauboussin said on Friday. ''I'm slow to accept the theory of a bubble in high-tech stocks,'' he said after a presentation called ''The New Economy'' in Milan. While conceding that it was hard to accurately gauge which high tech stocks were overvalued, he said that there was a wide and growing gap between the economy and the accounting models traditionally used to measure value. ''The cash economics of these (high tech) companies are better than their earnings numbers indicate,'' he said. Mauboussin has developed a model to help investors with their valuation of Internet and high-tech stocks that focuses on cash flow rather than earnings, and return on invested capital rather than return on equity. He argues that Internet companies have economics that are different from traditional companies, and produce a ''winner take all'' outcome. Asked how he would adapt his valuation models for the so-called ''new economy'' to Europe, Mauboussin said ''I wouldn't.'' The new economy is driven by intractable trends like globalisation and freer markets that will continue, he said. ''The U.S. has an advantage in terms of venture capital and its legal framework. But European companies will find ways of circumventing those things.'' He mentioned German software giant SAP's decision on Wednesday to institute a U.S.-style stock option programme to stem an exodus in top staff as an example.

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