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Non-Tech : Any info about Iomega (IOM)?
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To: RetiredNow who wrote (52999)4/18/1998 2:53:00 PM
From: Rational  Read Replies (1) of 58324
 
I am sorry. I was reading the messages in the reverse chronological order. What you are referring to is the standard Gordon growth formula that applies to a predictable CONSTANT growth rate in earnings and risk-adjusted cost of capital. You are assuming a constant growth rate of 10%, a COC of 15% and a current EPS at .35. How do you know that IOM is a fully mature firm with such CONSTANT predictable numbers?

You are absolutely wrong in assuming that this is the only formula taught in finance courses. You need to look at models for super-normal growth following sub-normal growth. In any case, all these models need assumptions about the parameters (earnings, COC and growth) that clearly are unknown (precisely) for many companies like IOM, Yahoo!, AOL, NSM, CY, etc.

I do not think you should be getting rude based on a clearly wrong presumption on valuation, IMHO.

Sankar
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