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Technology Stocks : GoTo.com, promising Internet search engine -- Ignore unavailable to you. Want to Upgrade?

To: Dalin who wrote (498)	8/6/1999 4:11:00 PM
From: Liren Chen	Respond to of 977

DLJ analyst lowed earning estimation with $100 target again. This guy is no credit at all (call $100 when stock was at $65). This guy is very dirty too (When he called $100 target and DLJ sold 900,000 shares at 60+). The following is his report: OTO.COM (GOTO: $29)*+ 08/05/1999 GoTo Reports Superb June Quarter Results Earnings Per Share Old New P/E Ratios (FY:Dec.) 2000E $(0.46) $(1.08) NA 1999E (0.80) (1.18) NA 1998A (0.75) NA Rating: BUY Change: None 12-Mo. Target: $100 GoTo.com's unique search methodology provides consumers with keyword search results that are ordered based on the amount an advertiser is willing to pay for the consumers' click-through. Although advertising supported search engines are not new to the Internet, GoTo's is a transaction-based, pay-for-performance model, rather than a media-based model. Consequently, GoTo's results-oriented search is far more efficient for consumers than impression-driven models such as Yahoo!'s. Advertisers also receive a compelling value proposition, as they control precisely what they pay to attract a consumer to their site, rather than spend large amounts to lock up "exclusive" portal real estate which may have little bearing on customer acquisition efficiency. We are maintaining our 6-12 month target price of $100. We arrive at this valuation through a discounted cash flow valuation which reflects the earnings leverage in its business model. We use a 14.5% cost of capital against a 12.6% terminal growth rate. Our revenue growth broadly reflects Internet commerce and advertising trends, and we expect the above-mentioned margin expansion as the model matures. This results in an operating margin in the 25%-30% range and a $4.6 billion valuation, which translates to a $100 stock price.