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To: RJL who wrote (48225)	6/19/1999 3:56:00 PM
From: BGR	Read Replies (1) \| Respond to of 86076

The main problem of overvaluation with Inet companies stems from the general impression that it is a net negative margin industry and will stay so forever. Which is true for a very large section of companies, but is fast changing. OTOH, assuming that the Inet as a whole grows at 5%/month for the next 5 years and then at 20%/year for the next 5 as the present high tech industry and then at 3-4% forever like the rest of the economy (which by most estimates is a very low one), has a net positive margin of 5% (which may be stretching a bit, but will compensate low growth estimates), and that interest rates stay flat or go down (as disinflation becomes the norm), DCF indicates the entire Inet industry to be fairly valued (I did the calculations 3 months back, I can hunt them up if anyone wants details). So it all depends on one's vision of the future.