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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (12853)	12/16/1999 6:49:00 AM
From: 100cfm	Read Replies (2) \| Respond to of 54805

speaking of this<<-- the game almost never advocates investment in any stock that you are interested in!">> I don't see what all the excitement about exds is. looking at their numbers scared the hell at of me and i have the following comments. 1. yes they are growing revenues at a quartely rate of 40% 2. but cost of sales are growing in lockstep with revenue. 3. they are burning thru cash like s--t thru a goose. 4. cash has gone from 330mm in Q2 99 to 164mm in Q3 99. 5. longterm debt has gone from 215mm in Q4 98 to 534m inQ399. 6. losses have also grown in lockstep with revenue growth. at this rate they will be out of cash in aprox. 3 quarters. 7. which means more longterm debt. probably an increase to 800mm. 8. gross margin is 18.5%. not kingly nor gorilla like for sure. and since cost of sales ie: data center equipment, furniture and computers are growing dollar for dollar with sales, i don't see an increase in margins any time soon. 9. in fact they are not projected to make a profit until 2001. and only 14 cents/ 7cents now post split. that is a whopping 11mm, for a company with a 15 bil. cap. 10. insiders own only 14% of company. they have sold aprox. 6% in the last 6 months and there have been no purchases. not a good sign. In sum i realize that owning exds this yr. has been extremely profitable(three 2 for 1 splits!), but i would be more inclined to count my blessings and run then to be putting money into it. i know the manual states not to look at profit but rather revenue, but if there is no factual reason why margins will increase at some point during the revenue explosion then what is the point.If they are always going to be aprox. 18% gross margin, i don't care how much revenue they can do, ever. If i'm all wrong on this, flamethrowers welcomed(thats how i learn). 100