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To: Haim R. Branisteanu who wrote (49486)	5/5/2000 6:08:00 PM
From: Casaubon	Read Replies (1) \| Respond to of 99985

Actually it should be obvious that companies who are not profitable eat up the capital given to them by those naive or ignorant who supply the money. Many biotech companies are not yet profitable and eat up capital. Do you consider, these "new era" companies who consume other peoples money? How would you value a company operating on borrowed dollars with a substantial pipeline? I am not being facetious, I would like to know. Even though they burn money, they have obviously created something, or they would not have a pipeline. They don't just destroy money; there is an expected "success rate" with a rubbery timeline associated with it.

To: Haim R. Branisteanu who wrote (49486)	5/5/2000 6:54:00 PM
From: Haim R. Branisteanu	Read Replies (2) \| Respond to of 99985

U.S. Consumer Debt Rose $9.1 Billion in March to $1.4 Trillion Fri, 05 May 2000, 6:53pm EDT By Vincent Del Giudice Washington, May 5 (Bloomberg) -- Borrowing by U.S. consumers rose in March as use of credit cards accelerated, Federal Reserve statistics showed. Borrowing increased by $9.1 billion for the month to $1.4 trillion after an $11.5 billion increase in February. Borrowing for the first quarter rose at an 11.2 percent annual rate, up from a pace of 8.1 percent in the fourth quarter. RISE MORE THAN TWICE GDP growth The rise in debt coincides with consumer spending that grew in the first three months of the year at the fastest pace in 17 years. Borrowing, fueled by unemployment that sank to a 30-year low of 3.9 percent last month, has boosted the earnings of lenders such as American Express Co., Citigroup Inc. and Ford Motor Co. ``Consumers are still feeling good,'' said Robert Dederick, an economist at the Northern Trust Co. in Chicago, before the report. ``They have jobs. Their incomes are rising. And they're borrowing money.'' The March increase means consumer debt grew at an annual rate of 7.7 percent in March compared with gaining at a 9.8 percent rate during February and 7.1 percent for all of 1999, the Fed said. Revolving loans, which include credit cards, increased $7.8 billion after rising $5.7 billion in February. Auto and other loans rose $1.3 billion in March after climbing $5.9 billion. Analysts had expected borrowing to rise by $10 billion. Lenders Profit The rise in borrowing has been a boon to lenders. Profit at American Express Co. rose 14 percent in the first quarter, which ended March 31, as a result of fees from cards and mutual funds. The company said the average cardholder charged $1,980 in the quarter, up from $1,781 a year earlier. Ford Credit, the lending arm of the world's second-largest automaker, said its earnings for the quarter rose $53 million, or 18 percent, to $353 million. Citigroup, which has issued 97 million cards worldwide, reported last month that income from its global consumer unit rose 21 percent to a record $1.21 billion in the quarter. Economists watch the Fed's report to help them gauge credit card use and consumer demand. The statistics don't track loans secured by real estate, omitting home equity loans, which have grown in popularity over the past decade.

To: Haim R. Branisteanu who wrote (49486)	5/5/2000 9:00:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 99985

Haim, I saw you use before the valuation of $17 Trillions for the US market, I was under the (probably wrong) impression that a good measure of total valuation is given by the Willshire 5000, or a current valuation of $13.4 Trillions. As for increases in loans, I get for the last 6 months an increase of $50 Billions in commercial paper, but only $20 Billions in total bank lending, or a total of only $35 Billions per quarter, since you must include in this the April date in which a lot of income taxes are paid (more than normal quarterly, but I do not know how much), I think that with a growth of end goods at $100 Billions per quarter, an increase in debt of $35 Billions (and could it be just $25 B because of taxes?) is not really that bad. What surprised me more is that the increase in working capital comes almost exclusively from debt and not from corporate cash flow (which I think excluding the I-net and biotech money losing operations) is better than 3%. After all, all this technology that is manufactured by the "new economy" is someone's depreciable asset. I would guess that (without going into their balance sheet right now) that a company like INTC has a good $.5 billion quarterly in cash flow from depreciation. That is why I do not understand that bulge in corporate debt. And I believe your numbers do not even account for some gargantuan debt offerings in the last six months (was it a Billion or so just for AMZN?). Could it be that somehow, a lot of the money that is going into IPO actually found its way there from bank lending and corporate commercial paper? Zeev

To: Haim R. Branisteanu who wrote (49486)	5/6/2000 1:55:00 AM
From: FR1	Respond to of 99985

Actually it should be obvious that companies who are not profitable eat up the capital given to them by those naive or ignorant who supply the money. This would apply to almost all "New Era Internet related Companies" with huge market caps and huge negative cash flow. Yeah, I remember reading about one of these guys. He tried to get subscribers but just could not sign up enough subscribers to make a profit. Living off investors money, he was clearly one of the blood sucking people you are talking about. In desperation, he tried to sell his business for a song to the biggest tech business around. The big business reviewed all the technology, rejected the idea of buying and then copied the idea. The big business then really rolled out the product. Now the small guy was even deeper in the red. The only thing left for the small guy to do was to sue for patent infringement but what chance do you have against a army of lawyers. In one of the greatest events in financial history, Bell defeated Western Union in court and his stock went from $300/share to $1,000/share in literally a few hours. Western Union gave up the phone business when it was offered to them for almost nothing. Moral of the story: Remember this blood sucking startup businesses in the red the next time you pick up a phone.