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To: Bill Harmond who wrote (3459)	11/27/2000 11:57:01 AM
From: 16yearcycle	Read Replies (2) \| Respond to of 57684

"limited opportunity" Does anyone else agree with this?!

To: Bill Harmond who wrote (3459)	11/27/2000 1:51:35 PM
From: Wizard	Read Replies (1) \| Respond to of 57684

I read the note and it appears that the analyst has finally figured out the difference between direct and indirect materials. He basically says the market for e-procurment and marketplace software are underpenetrated but that growth will slow down for indirect players and the stocks are therefore overvalued. This is not exactly a value-added call, all of these issues have been on the table for a long time. I think the world has become schizophrenic when it comes to hypergrowth. How do you value 200%+ growth on big numbers when it decelerates from 500%+ on small numbers? How about when traditional cost of capital 'risk' arguments indicate a 'proper' discount rate of 10-15%. If you can compound growth at 100-200% for 5 years and your annual discount rate is 15%, there is an obvious disconnect regarding the differential. Anybody running a DCF can tweak it a little and alter their out-year target price exponentially. The facts are that Ariba and C1 have grown at rates never before seen in the software industry. There is obviously something special going on, the extent to which can be debated but the facts remain that unusual growth deserves premium valuations. This call is just noise.

To: Bill Harmond who wrote (3459)	11/27/2000 9:57:32 PM
From: Lizzie Tudor	Respond to of 57684

firm does not believe that that prices reflect the limited opportunity for simple procurement and marketplace applications; there is a school of thought out there that thinks the big marketplaces are all going to fail. That would be the GM thing (covisent?) and some others. I can see the rationale in that but the truth is what these consortiums are really doing is outsourcing the supply chains for the participants, which is very valid. The question is how much does ariba have in the supply chain area. They are moving in that direction I know.