EXLN - Excelon Message Board

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Technology Stocks : EXLN - Excelon

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To: hasbeen101 who wrote (635)	11/21/2000 7:02:48 PM
From: ahhaha	Read Replies (3) of 811

I know that you know (from Valuation 101) that the expected return on a stock is based on the present value of future cashflows. There is no stock trading according to that scheme. It's merely a way to rationally create a model of value. It must be clear to you by now that the stock market is not predictably rational. How could it be? It reacts to itself, so how can that be quantified? It can't. Why bother trying? It's just putting your prejudice onto others. Who says that one model is all there is to say about valuation? How do you know the input parameters upon which the model depends are accurate? You don't. No one does, because they change over time in unpredictable ways in a period shorter than the least acceptable time frame for the computation. You also know that these cashflows can take the form of the company being sold to another party, or they can take the form of earnings. Valid valuation models never have anything to do with book plus goodwill value, not even as an affine parameter. As the management have indicated they would not accepts a takeover at anywhere near these levels, No rational model can factor in takeover value and none that I know do. Further, you should never buy a stock because it is whispered to be a takeover candidate. It is decisions based on this kind of psychology that the public has presumably learned to reject by the deflation of great expectations this year. You are certainly justified in saying that a company should not be sold for less than x dollars, but that assertion is based on future earnings growth potential and that's the only factor that the market assesses. and the earnings have consistently been negative with no clear trend showing they will turn positive, I think it's inescapable that the present stock price in fact factors in a substantial improvement upon the present state of affairs. Previously you were disagreeing with the market and now you are agreeing. If the company takes off on the upside, will you be disagreeing again? The point I'm making is that the stock market reflects emotions more than it does accurate evaluations and so it fluctuates all over the board only on average from time to time actually passing through a true and accurate pricing. You'll never know when that is, and so no conclusion can be reached as to whether today a stock is low or high. When you try to do so you only shoot yourself in the foot by creating false expectations which mislead. So what do I mean by intrinsic value? Would you care to share with us your current revenue and earnings projections through to the end of 2001? I have had to modify them because the company chose a different strategy than that which they had announced in January. All analysts have had to make this adjustment. You can adjust what I said previously accordingly.

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