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Non-Tech : Berkeley Technology Limited (BLKYY) -- Ignore unavailable to you. Want to Upgrade?

To: architect* who wrote (562)	8/30/2000 11:42:51 PM
From: J. Conley	Respond to of 955

Needless to say, LDP is difficult to value. FBR did a sum of the parts in May which I think is a rather good model. A couple months ago I ran some numbers based on that model and posted it. If you want to take a stab at valuing just the VC operation, in addition to FBR's method, I suppose you might as a comparison consider the following model, which is used by Merrill Lynch when valuing CMGI: 1. value of public holdings, 2. estimated value of companies projected to go public within the next year (in other words near term expected liquidity events), 3. estimated value of the remaining holdings (not cost), and 4. cash. Then two additional factors are considered: 1) estimated change in the NAV of the current business over time, and 2) the estimated value of all new investments or other value the company might make over time. ML uses an approx. 2.4X the estimated NAV to arrive at a target price for CMGI. Clearly, NAV is not book value under their method. *** So, FWIW, without actually doing the numbers, using this method the LDP target would likely be >$50. If you applied FBR's sum of the parts calculation today, it would also likely be in the $50 range. Of course, there is still what could be considered an intangible with LDP. That is, LDP's business model makes significant profit right now, the BV is growing quite rapidly, and there are other developments going on in the non-VC businesses. This somewhat distinguishes it. A valuation target using these methods can at the same time appear incredibly low, and at the same time appear to be too high. And perhaps the issue of scale and LDP's rapid growth in BV or NAV is one of the most difficult aspects to assess in this model. Looking back, it's safe to say the simple 2X the present NAV has been an inadequate way to project a target on this company. Case in point, BEST's target of $8.25 (for end of FY2001) that at this time last year was reasonable based on the calculations then. Obviously, LDP is a moving target when attempting to determine value on this basis. Thus, IMO it is not pie in the sky to predict the stock could hit 60 (only a 3.8 billion market cap.; with an open IPO window and favorable sentiment toward the sector) or 70 or even higher over time, and at the same time reasonable to have a target of around 35 or 40 based on present numbers. IMO, however, to argue that LDP is fairly or overvalued right now requires some longer term assumptions about the IPO market, the public and private holdings, and continued sentiment toward this sector that I do not believe are appropriate. Time will tell. Best regards.