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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)

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To: j g cordes who wrote (21172)	7/27/1998 3:06:00 PM
From: CalculatedRisk	Read Replies (1) of 31646

j.g, you are close! A profitable windfall opportunity is great! Congratulations to TAVA. But of course investors need to value the windfall appropriately. You wrote: "Are you saying market cap should equal "profits" over the next two years?" Answer: NO! Please reread my post. The market cap attributable to the windfall opportunity should equal the "profits" for the windfall opportunity! ( Note 1) This is a basic concept and IMO is key to understanding why TAVA's price will be substantially lower next year. The market cap for the ongoing venture needs to be evaluated separately. If you reread my post, you'll notice I separated these two calculations. This is why your comparison to IBM and MSFT does not work. As an example, any bubble opportunity at IBM is dwarfed by their ongoing business. The opposite is true for TAVA (the bubble is large!). Regards, Bill (Note 1) Actually, for a windfall opportunity, the market cap attributable to the opportunity should equal the discounted Free Cash Flow from the opportunity - "profits" is just short hand!

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