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Technology Stocks : IFMX - Investment Discussion
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To: bob zagorin who wrote (14584)4/26/2001 8:02:03 AM
From: Northern Marlin  Read Replies (2) of 14631
 
No, Bob, I wouldn't be surprised if Ascential achieved those numbers, or even improved on them a little.

But let's look at the valuation of the remaining company. The CEO says they'll have about $1 billion after closing. Shares outstanding at that time will be over 300 million, including the extra shares they'll have to issue to complete the settlement. For the sake of round numbers, let's say they'll have $3.00/share in cash.

Now we have Ascential with a current revenue run rate of $130 million and no profit. They're growing at 30-40% and hope to turn an operating profit in 4Q01. What's a company like that worth right now? 1 times sales? 2 times sales? No way I'd pay more than 3 times sales. That means a maximum value of roughly $400 million. Divide that by the more than 300 million shares, and Ascential, without its cash, is currently worth a little over a dollar per share to me; maximum.

I'll be more comfortable buying shares somewhere under $4.00. And I think I'll have a good chance of seeing that price. When the company reports 2Q01 results there will likely be a large drop-off in total revenues as database sales will fall off a cliff.

However, I'm willing to be persuaded by compelling arguments. I just haven't read any yet.

Phil
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