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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: GVTucker who wrote (12065)	1/5/2000 9:09:00 PM
From: John Malloy	Respond to of 21876

<Your analysis, although certainly arguable, is not a discounted cash flow analysis. It is dependent on two factors not related to cash flow: earnings and book value> My analysis is a discounted cash flow analysis. I am analyzing cash flows from the investor's viewpoint. I am concerned with the cash flows the investor sees. Those are the cash flows that determine what the stock is worth to the investor. In the Cisco analysis I presented, the investor sees a cash outflow of $138 plus commissions when he buys the stock, and a net cash inflow of $179 (stock price of $191 less $11.85 in capital gains taxes and commissions) when he sells two years later. Those are the cash flows I am analyzing. That investor will earn a 12% after-tax return. I presume you are talking about a different cash flow -- the cash flow Cisco reports on its books. That cash flow is important, but the investor's primary concern is how much of that cash flow, in one way or another, winds up in his pocket. John Malloy