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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (47334)	11/2/1999 11:24:00 PM
From: Black-Scholes	Read Replies (2) \| Respond to of 50808

O.K. fellas. All any analyst can do when pricing a company is to look at how the market is pricing the company's peer group. Agree? ZRAN? What needs to said. SIGM? Equally high multiples - based on cash flows - a one-trick pony company though. ESST? Lowest of all three but higher than CUBE's - not quite the same product line either. LSI Logic? Maybe not really meaningful but does share some markets with CUBE. O.K.- next year, CUBE's revenues from semi are projected at $240 million with, let's say, 35% operational margins and a tax rate on INCOME of 33%. That leaves about $60 million in after-tax profit. Robby Stephens and H.C. Wainwright have about $44-$50 million projected. I'll use their projections to be conservative. Now, let's award the above earnings number with the average peer group market multiple of 30 (which is also rational and consistent with CUBE's semi growth rate of 30% - per management's Q3 CC). $50 million * 30 = $1.5 billion Divide that by 45 million shares and we arrive at about $33/sh.. The above is a conservative and reasonable valuation of CUBE's semi business. P.S. Coopie, where are you getting your 33% tax rate? If you think taxes are figured by the market when valuing stocks in a spin-off or sale , use the long-term capital gains rate of 20%.