Hi Mindmeld - took a stab at what your rev. projections meant.
Assume you are correct and co earns 23.6, 26, 33.8, 42.2 and 50.7 B$ in FY '01 through '05.
Next, since you are a cash flow guy, let's look at cash flows from Op's. With one adjustment. We are working out what shareholders might like to pay for the company, so no sense adding in the amount they pay right back out again - namely the stock option benefit etc.
So, take op cash flow, minus adjustments for stock option tax benefit and you get about 1/6 of revenues. Pretty healthy.
Makes 5 year cash of 3.9, 4.3, 5.6, 7.0, 8.5 B$. Forgetting about time cost of money this straight sum is worth about 30 B$.
Or maybe a generous $4 per share.
So, as a cash flow guy, how would you recommend such a purchase?
John. |
