Hi Alien,
A friend of mine asked me to do a bit of digging into Fore's numbers, so I
did a bit of the back of the envelope trick using my new 1GHz abacus to see
what this company looks like. Here's a summary of what I found, and it
doesn'tlook too good. I'm not in this one and after looking at the numbers
I don't see any particular reason to get in:
FORE's performance is much worse than the industry:
FORE INDUSTRY
REC. XOVER 5.18 7.19
INV. XOVER 3.57 10.34
ASSET XOVER 0.89 1.20
Proj. Growth 32% 29.4%
(5 year)
Gross margin is worse than the industry, and operating margin is about 50% of
industry numbers. Return on Assets (ROA) is much worse than the industry,
and revenues per employee are about 60% of industry standard. These numbers add
up to a pretty gloomy picture concerning asset management -- particularly
inventory ands receivables. It should be no mystery why FORE has such poor ROA numbers.
Here is an analysis of cash flow with certain modifications to eliminate
the effects of tax benefits due to issuance of options, and deferred revenues.
CASH FLOW
9 Months 3 Months
'98 '97 '98 '97
As reported $45,645 $31,567 $23,451 $19,087
Tax Benefit for <5,112> <1,376> <456>
stock options
Deferred Revenues <17,463> <6,862> <9,280> <3,860>
-------- ------- ------- -------
Adj. Op Cash Flow $23,070 $23,329 $13,715 $15,227
These numbers paint a pretty dismal picture. I see little here to entice me
as an investor. |
