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Politics : Formerly About Advanced Micro Devices
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To: Kevin K. Spurway who wrote (28746)2/24/1998 11:51:00 AM
From: Reginald Middleton  Read Replies (1) of 1572753
 
<You have two companies with the ability to generate $100 of future cash flows as discounted to present value. Company A has 2 billion dollars of gold assets in its coffers, company B has nothing but the $100 worth of expected cash flows.
Do you really mean to tell me that you would value these two companies as equals?">

I would if there were no possibility of liquidating either company.

Suppose the companies were Gold Mining companies, would you still feel the same? How about if they were both
chip manufacturers, and Company A sells its assets for 2 billion dollars in cash on the market and uses it to buy a state of the art fab and open up additional channels of distribution or triple its marketing efforts, would you still feel the same? Assets have value. That value is often mistated on balance sheets for it is not carried at market value, but they still carry value nonetheless.
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