January Effect 2001 Message Board

STOCKTALK

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Strategies & Market Trends : January Effect 2001

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To: Bob Rudd who wrote (66)	12/19/2000 10:53:50 PM
From: Q.	Read Replies (1) of 289

re. TERN, I also took a quick look, and like you I was left unsure of what I thought. The cash value per share is $8.9, and the stock is selling for about 4.75. That's really unusual for a stock with a market cap as big as this. When a stock sells below cash value, you usually expect to see some substantial cash burn. When I saw the 9-month loss from operations was $94 million, I thought my gosh, this is one terrible basket case. But somehow the cash flow from operations is only a negative $5 million over the same period. That's probably the biggest discrepancy I've seen between earnings and cash flow, and to figure it out it doesn't help that they have omitted the customary adjustments to net earnings that would normally be listed in the cash flow. It seems that they have done a lot of acquisitions, and this has produced a lot of goodwill to depreciate. That seems to be a big part of the discrepancy. But just the same, any company that has grown so rapidly by acquiring lots of other companies is simply too hard for me to figure out. I'd rather find something easier to understand.

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