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Technology Stocks : eBay - Superb Internet Business Model

EBAY 91.71

-1.4%

12:37 PM EST

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To: Doug Fowler who wrote (664)	11/7/1998 6:26:00 AM
From: James Overko	Read Replies (1) of 7772

EBAY- Market Capitalization (perspective) One investment seminar offered the following exercise: 1----take the market Cap.(39 million shares x current stock price $84)= this equals over $3 billion 200 million--- 2----- multiply it x 7 percent (this is what might be achieved if a bond was issued aprox) 3.2 billion x .07 = 224 million (ANNUAL RATE OF RETURN) in other words this is what we could achieve if we put our stock $$ towards a fixed rate instrument annually --- in other words we got together and purchased a bond instead of EBAY 3-- Compound this BOND amount (I will not do the exercise-- but growth is significant -- in two years we are earning $256 million year 2000 4--- compare it to projected earnings of EBAY (net income) if we use the optimistic view that the business will explode and they will dominate without competition 18 cents per share or 7 million 1999 ///---70 cents or 27 million 2000/// --- 2$ a share or 78 million 2001 5---- finally compare the two --- does the investment make sense? -- if we could be earning 250 million a year compounding in a fixed investment when EBAY's equivalent is earning 6 million/// 27 million and 78 million in the most optimistic scenarios -------I LOVE EBAY like everyone else --- but from a practical standpoint it is a stretch to justify the current market capitalization this exercise has helped me to avoid pitfalls in the past -- it is not perfect and not meant to be a final word -- just a perspective--- thanks

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