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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (7091)	11/5/1999 1:25:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 9068

Mike, I agree with your comments right up until you said At a PSR of 10, the market cap will be $40 billion, three times what it is today. This, I think, highlights one important point where I diverge from many analysts' thinking. Certainly, sales are important, but it is ultimately the expectation of free cash flow that determines a stock's price. So, assuming that SEBL, with sales of $4 BB is a mature comapny, and it generates free cash flow of around $1 BB, it should have a market cap of around $10 BB. The implications of this, of course, is either that investors are expecting hypergrowth to extend well beyond four years, or investors are using the wrong metrics (price momentum etc.) I think the point that many growth investors tend to miss is that some day hypergrowth will end and the company will be valued as a mature entity based on its cash flow. A good case in point is Dell. While the company continues to post impressive results, and continues to gain market share at the expense of its rivals, growth is definitely slowing. The annual growth of 55% per annum is now down to the mid to high 30's. You might also consider Xerox, which, a couple of decades ago was one of those hyper-growth companies, and is now a mature company. TTFN, CTC