Sapient (SAPE) Message Board

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Technology Stocks : Sapient (SAPE)

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To: mchip who wrote (73)	9/30/1998 7:31:00 AM
From: Pancho Villa	Read Replies (1) of 178

mchip (are you long MCHP?): The problem with SAPE is best summarized in their negative cash flow from operations which is worse than negative free cash flow. As you probably know, Free CF= CF from operations - CF used for investment activities. So if you have negative cash flows from operations you cannot have a free cash flow even if you do not invest at all. The big picture with SAPE is that the story changed in 98. I did some benchmarking of CATP vs. SAPE financial statements and SAPE is much more liberal than CATP. I am not an expert in their business but I am a developer and can tell you from experience that fix price contracts usually get you into trouble. One interesting thing with SAPE is that the reserves they are supposed to set aside to cover over runs have not increased proportionally to their new contracts, another red line. You are a smart man, I am not claiming to have all the answers but my experience is that I have been burn in the pass when ignoring savvy shorts (I am not claiming I am one) that show up at a thread I am long. PLSIA comes to mind.

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