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Non-Tech : Barnes & Noble (BKS)
BKS 6.4900.0%Aug 19 5:00 PM EST
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To: Glenn Petersen who wrote (1146)5/13/1999 12:22:00 AM
From: Chuzzlewit  Read Replies (1) of 1691
 
Glenn, some things you are neglecting in your analysis:

BKS is expected to grow earnings at the rate of 52.3% next year and 29.6% the year after, and then assume a rate of 21.2% per annum thereafter. By contrast, BGP is expected to grow at 8.6%, 15.8* and 20.5% for the same periods.

Secondly, You have not factored the effect of Ingram into your calculations. I expect that to be a major money maker because it is the wholesaler for AMZN (I believe about 60% of their books are purchased through Ingram).

Thirs, I believe that Borders is a bad comparable because they have stumbled badly. Look at the stock chart to see what I mean.

Finally, there is nothing rational about internet "valuations", and the valuations established at the time of an IPO bear little resemblance to what shareholders in a frenzy will do to them. Look at NITE and SWS as an example of what happens. Or look at CMGI. In any event, discounting the restricted shares by 40% does not make much sense given that background.

You should also note that growth through BKS is selling at a significant discount to growth through the S&P500.

Bottom line is that I have no idea where BKS will trade if momentum investors hop on board. It is my feeling that the stock will see about $50 shortly after the IPO, and depending on how investors treat BNBN the share price of BKS will be anybody's guess.

TTFN,
CTC
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