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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (30164)	8/30/1999 9:16:00 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 41369

Superior cash flow model to what and from what ?? I didn't post this to argue with you, however it is interesting to me that a lot of valuation hawks who accuse net investors of never doing any analysis in fact have never done any themselves. The model looks like this: there are 4 quadrants, startup, growth, hyper-invest and hyper-growth. Taking a brick-and-mortar grocery store vs. the webvan as an example... both start off in startup mode at the same point. The brick and mortar grows with build-out, plant and equipment, etc. As he grows he gets to the growth quadrant, but his future cash flows are forever limited by plant and equipment, because he can only grow one store at a time. The internet grocer otoh, goes into hyper-invest phase which is more expensive than the initial investment of the brick and mortar store... but tne net result is that when the investment is complete he can bring the entire world online at one time. Future cash flows are much greater than the future cash flows from the brick and mortar retailer, there are mostly fixed costs as opposed to % of sales etc. AOL isn't a retailer but its the same model where plant and equipment are fixed as a % of future cash flows. The point is I'll bet the serious internet investors know a lot more about cash flow than you give them credit for. You may not come to the same conclusions of course.