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Technology Stocks : THQ,Inc. (THQI)
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To: Quad Sevens who wrote (10069)3/2/1999 1:15:00 AM
From: Todd D. Wiener  Read Replies (1) of 14266
 
Wade-

I disagree with your statement. A 5.55% bond means that it takes 18 years to repay the investment with cash flow or interest payments. That's not the same as a P/E of 18. If it were, then why has the long-term P/E for the S&P500 been in the teens, while there was annual growth of 8%?

If a company should trade at a price equal to the amount of cash flow expected in the next 8 years, then a no-growth company should trade at 8 times earnings. This, of course, doesn't address cash flow discounting, which would shave a few points off the P/E figure.

Trippi-

I'm not disputing THQI's decision to conduct the secondary offering in 1997. I don't think that the decision was made in order to increase the float; it was due to capital needs.

Todd
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