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Strategies & Market Trends : Free Cash Flow as Value Criterion
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To: Reginald Middleton who wrote (174)11/9/1997 12:36:00 PM
From: jbe  Read Replies (1) of 253
 
Reginald -- how about a FREE CASH FLOW analysis of IBM?

You have analysed IBM in line with your system of "rational analysis," which may be -- or rather probably is -- a superior method of analysing companies. As I have said before, there is more than one way to skin the cat (and hopefully, truly fine companies will make a good showing no matter how it is skinned).

However, this thread is devoted to free cash flow analysis. You noted in the introductory post on your own thread (Professional Equity Analysis) that you hoped to develop a free cash flow analysis model. So how about it? Is there some way for you to translate the IBM data you have provided into free cash flow language?

jbe

P.S. On a completely different matter: value, rather than the accounting convention known as EPS, may indeed be the long-term determinant of price. But as my bitter experience tells me, the surest determinant of a short-term drop in price is the failure of a company to meet EPS quarterly projections. (I own Western Digital.) Then, of course, there are the unquantifiable determinants, such as investors' perceptions of the prospects of a particular industry (in this case, the disk drive industry). Are you so convinced that the market will ultimately recognize True Value? As an historian, I have always been struck by the determining role played in all our affairs by irrationality and outright stupidity.
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