GEAC.....Canadian best kept secret Message Board

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Gold/Mining/Energy : GEAC.....Canadian best kept secret

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To: AChan who wrote (1311)	7/14/2000 11:57:32 AM
From: Doug	of 1571

AChan: You need to analyze the results slowly to appreciate the market valuation. In brief, the Company's presentation of results is confusing because we have depreciation, good will and Investment expenses which are all big and vary Q to Q and Y to Y. The most important facts are Operational earnings , Receivables, cash Flow and deferred revenues. I shall say a few words about each. Operational earnings viz earnings on sales/revenue: For the Q, it is a loss of $7m. This means that they have either levered their Sales by selling services cheap or their Staff are overpaid and on the bench. A minimum of 10% gains on sales is what I would expect. Receivables & Deferred revenue are both up sharply indicating a very unhealthy trend which usually leads to a write off downstream. Amortization of assets and goodwill are +ve and these have been used to prop up adjusted earnings. Looking ahead , we should expect Operational earnings to decline again due to poor market for non Internet software. This will result in lower adjusted earnings. As I said earlier the Company's model is flawed. It has only relied on amortization to prop up adjusted earnings. For $1.75 cash flow , a PCF of 5 is high.

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