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To: jim kelley who wrote (39002)3/28/2000 10:09:00 PM
From: jim kelley  Read Replies (2) | Respond to of 93625
 
Using the dataquest type number and marketshare estimates for the RDRAM, I get an estimate of 1.23 Billion revenue in 2003. The free cash flow is about 80% of that or about 1 billion in cash flow. This gives 50 to 60 billion market cap on DRAM business alone. That yields around 2100 per share at the end of 2003.

:)



To: jim kelley who wrote (39002)3/28/2000 11:02:00 PM
From: Zeev Hed  Read Replies (1) | Respond to of 93625
 
Jim, take a tax rate of about 40% and assume that sometime between here and the time your "free cash flow" materializes, people may not pay 50 times free cash flow. In the oil industry they are quite happy with 5 to 10 times cash flow even when that cash flow growth at 30% per year.

I think a more rational valuation (at least for investment purposes) should be half that much or 25 times cash flow. That will deflate your own 2100, to $630.

Zeev


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