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Technology Stocks : Net Perceptions, Inc. (NETP) -- Ignore unavailable to you. Want to Upgrade?

To: Sofa Kingdom who wrote (2383)	2/5/2000 6:34:00 AM
From: rupert1	Read Replies (1) \| Respond to of 2908

SofaKingdom: You're right. It should be $238 not $125. Here are my calculations. It would be interesting to see yours if you have the time. The target of $100 set by Piper Jaffrey was not given a time scale. "As such, we have initiated a $100 price target for Net Perceptions, representing 27 times our conservative full-year 2001 revenue estimate of $78 million." Let's assume it is 6-12 months. Let's assume 27 times is an appropriate multiple on revenues, although it may also be conservative. Then ask the question, how conservative is his estimate of FY2001 revenue of $78 million? NETP has achieved 300% sequentially year over year and 50% quarter over quarter. For the sake of the argument, let's take the 50% quarter over quarter as the metric, given that Piper Jaffrey recognised that the rate of growth is accelerating. I refer to NETP "classic" to mean without KD1 or any other acquisition. I refer to KD1 separately. At 50% sequential per quarter "classic" will achieve about $33 million FY 2000. KD1 is conservatively expected by the company to contribute $8 million. The total FY2000 is $41 million. Up until now KD1 has grown at about 100% per year. But it's exposure to NETP's customers should at least double that rate. Assuming only 200% increase for KD1 for FY2001 it will have revenues of $24 million. In FY 2001, assuming 50% sequential growth, "classic" will have $162 million. Add $24 million from KD1 for a FY2001 total of $186 million. This is 2.38 times larger than the Piper Jaffrey estimate. Using its 27 multiple assumptions, the 6-12 months target price as of now ought to be $238. This does not take into consideration: - greater than 50% sequential by quarter for "classic": - greater than 100% for KD1 in 2000 and 200% in 2001: - the impact on revenue growth of new acquisitions: Anyone else like to try some back-of-the-envelope calculations?