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To: Anthony Tsai who wrote (20056)	8/16/2000 9:11:45 AM
From: BWAC	Respond to of 21342

<Cash flow analysis isn't the only method of valuating a company.> No it isn't the only method. But cash flows are a good place to start. Our Professional Auric has skipped all the analysis of the cash flow statement and went straight to the bottom number that serves his agenda. A methodology somewhat akin to 'This is my theory, now let me find a number that supports it, while I ignore all the numbers that refute it and any possible explanations'. The cash flow statement tells a story. Read it and think. Cash flow was negative $14 Million. What caused that? What business factors led to this? What specific line items may have skewed the result or presented an unclear picture to anyone who just looked at the bottom line? Revenues more than doubled form the March Quarter to the June Quarter. Correspondingly you would expect a large ramp up in Accounts Receivable, Inventory, Account Payable, and quite possibly some sort of purchases of Equipment. All these would effect the final cash flow number until the growth is normalized and leveled off. The increase in Accounts Receivable explained 38 Million of the negative cash flow. Cash hasn't flowed in yet, its still receivable. Get it? Sales just ramped, until payment is received cash is used up. The increase in Inventory explained another 12 Million of the negative cash flow. Sales ramped, ongoing inventory does too. This uses cash, until it is sold. Accouts Payable increased as well. 23 Million. However this decreases cash flow. Net this 23 Million against the Receivables and Inventory additions of 50 Million and you get 27 Million positive when the business matures and steadys.

To: Anthony Tsai who wrote (20056)	8/16/2000 10:48:13 AM
From: Sir Auric Goldfinger	Read Replies (1) \| Respond to of 21342

Good Comment Anthony! You seem to value company's on a P/H and P/V and P/P basis: That's price to Hype, Price to Vision (preceived, hey what a joke.com) and Price to Piker basis. "Hey Auric, Cash flow analysis isn't the only method of valuating a company." And how do you propose to value this joke since it has negative operating margins and is chewing cash and has gross margins less than crude oil? let me guess, you're gonna make it up in volume!