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Technology Stocks : BAY Ntwks (under House)
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To: RFF who wrote (4590)3/13/1998 11:19:00 PM
From: 5,17,37,5,101,...  Read Replies (1) of 6980
 
RF, you're right about the DCF model. I calculated $43 using 25% growth for the next several years then declining growth rate till year 14 out in which I assumed no growth. I even assumed 10% increase in shares outstanding each year for several years then a decline in the number of shares. BAY will need more capital to compete with CSCO and launch new products. I also assumed a 15% disc rate which then declines in years out as business matures and is viewed as less risky.

PS: I didn't rejigger the numbers along the way to get the answer I wanted. $43.00 popped up the on the first try. This doesn't mean assumptions are correct though.

Jackson
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