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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (40459)	12/4/2000 11:20:17 PM
From: Gottfried	Respond to of 70976

Jacob and Chien, it would be instructive if one of you could post how several different scenarios alter the calculated 'firm value'. If Chien has it on a spread sheet, it wouldn't take long to do. Even if the calculation shows a wide range for 'firm value', that would be good to know. I suspect the calculation is good for company to company comparisons, but not to finagle the stock price. Quicken has a calculator for this, but it looks simpler than Chien's model. quicken.com Gottfried

To: Jacob Snyder who wrote (40459)	12/5/2000 12:19:41 AM
From: Chien Li	Read Replies (1) \| Respond to of 70976

The future "variables" are projected basing on the current financial data. A company may show high EBIT but that might require substantial capital investment and working capital. The firm value, by the way, also includes the cash the firm currently has. If you take a look at NVLS, you would find that NVLS has a better free cash flow performance than AMAT. Assuming the same growth rate (16%) which decreases to 10% in year 10, NVLS has a $42.5/share firm value. Indeed, this type of analysis is not absolute but gives you some basis for comparison.

To: Jacob Snyder who wrote (40459)	12/5/2000 12:53:58 AM
From: Robert O	Read Replies (1) \| Respond to of 70976

RE; EBAY analysis... I'm not following> 'do this type of analysis with a company like Ebay, whose market cap is currently less than the cash on the balance sheet' Ebay has a market cap of $8.6 billion and latest filing has TOTAL current assets (including all their cash) of about 1/2 billion dollars. RO

To: Jacob Snyder who wrote (40459)	12/5/2000 2:16:21 AM
From: FJB	Respond to of 70976

If you really want to have some fun, do this type of analysis with a company like Ebay, whose market cap is currently less than the cash on the balance sheet, which means Mr. Market, in his infinite and Efficient wisdom, is placing a negative value on the actual business. EBAY has $130 million in cash and cash-equivalents on the balance sheet as of September 30, 2000. Their market cap is almost $9 billion.