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Technology Stocks : Oclaro, Inc. (Avanex-Bookham)
OCLR 8.2600.0%Dec 10 4:00 PM EST
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To: Shaw who wrote (1191)11/29/2000 7:30:43 PM
From: tinkershaw  Read Replies (1) of 2293
 
Any input on what constitutes a reasonable share value, would be appreciated, as I plan to add to my small Avanex holding, at some point.

Based on present value analysis, giving AVNX a 50 multiple in year 5 and assuming a 100% revenue CAGR over the next 5 years (front-loaded and in lock step with the BRCM's, CSCOs, JNPRs of the world) with a terminal net margin of 20% and a discount rate of 19.5% (which is 1% higher than Epoch gives Phone.com (yeah now known as OpenWave) and 8% per annum dilution in shares I get a fair present value of $160.

So it seems to me that any price around here is a great deal, just a matter of confirming the sustainable advantage and growth of this company and then picking your entry point.

Tinker
P.S. This method is the preferred method of Epoch Partners for valuating companies like AVNX. I prefer discounted cash flow where possible, but it is darn tough with a company like AVNX to get there with any degree of confidence.

P.P.S. Regardless of how close this PV is to what others think, I think it at least amptly demonstrates that the long-term valuation of this company is much greater than its current valuation. It is just a matter of coming to grips with the strength or lack thereof of this companies fundamentals.
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