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Technology Stocks : AUTOHOME, Inc

ATHM 24.08

-3.1%

Nov 14 3:59 PM EST

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To: Gary105 who wrote (156)	8/6/1997 9:37:00 AM
From: Dan Markel	of 29970

>> rmbs and athm - both have excellent technology << athm hasnt got and is not developing any technology at all - read the prospectus after all - their business is much like AOL, MSPG, ELNK, PSIX, NETC's - its internet/content provider not more not less... thats a huge difference that should be understood by anyone investing in the co. - its actually commodity business by now, take a look at the above-mentioned cos' financials/growth rates/perpectives/eps estimates/valuations. moreover their (athm) services roll-out is limited by their cable partners' upgrade process pace, their revenues are not coming from the technological breakthroughs, new standard developing etc., they just charge customers for the (fast) access (not for equipment) even then they have to share those fees with the cable network operators (65/45%). having a small subscribers base there wont be a hope of considerable ad revs over years ahead. and dont you guys think that assuming 50% growth rate for a year or two (which could be even overestimated) and $28.5 18-mo target the stock is likely to feel comfortable at $15-16 currently (15 x 150% x 125% = 28x) otherwise there may not be enough buyers attracted to support 20x range being rewarded with such a little premium of 30% (28.5 - 22 = 30%) over 1.5 year? market was mad about the issue lately but they'll soon begin to watch the figures and the actual business environment/position/model putting common internet-related hype aside... on my part i keep considering it as a good near/mid term short anywhere above 20 - higher it goes more brilliant looks it for that purpose... regards, D.

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