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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (37338)	1/1/2001 8:11:57 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Mucho, It looks to me like there already are 500 million shares...actually 506,237,000 fully diluted shares per SEBL's 10/24/00 press release. Thanks for pointing that out! Using my back-of-the-envelope construct, I used AOL's data feed still showing 429 million shares. In light of techreports's and my complaints that we can't rely on data feeds for PE and PEG info, if we're doing really critical stuff I don't think any data feeds can be relied upon. SEC filings are the best. As for the growth of Siebel shares, I think that's the least predictable assumption of my back-of-the-envelope scenario and is probably the one that is most likely to be too conservative (too low). However, whereas Siebel's growth in outstanding shares has grown roughly 15% annually for the last five or siz years, I don't think it will grow that fast in the next decade. But I could be wrong. You suggest SEBL can grow their revenues by tenfold over just eight years--that is terrific growth. 33% average annual growth. Indeed, that's a lot. I think the market opportunities and option rights (as Maubossin would call them) support that possibility as being reasonable. I think there's enough wiggle room in that assumption that it could happen a little sooner or not a lot later. At 7 years it's 40% growth and at 10 years it's 25% growth. Do you suppose they will be doing some acquisitions along he way, and if so, might they not pay for them with some shares (increasing the sharecount further) Yes and yes. :) But I don't think acquisitions will be as critical to their success in the next 8 years as it has been in the last five, especially considering how rapidly the company grew upon the acquisition of Scopus. And if acquistions do become a major revenue-increasing strategy, I think the growth will be faster than a ten-fold increase in 8 years. In other words, I think the company can grow internally, organically, or whatever you want to call it, 33% annually over the next 8 years. Imagine a scenario that the company grows 75% next year, 60% the following year and 40% in the next year. In the remaining five years, the company has to grow only 20% annually to grow ten-fold in 8 years. Not unreasonable in my mind. I think one should really consider this factor [of increasing share count] before getting overly amazed at their current sales growth. Agreed. I also think higher and lower PSRs should be considered. It's important to repeat what I earlier wrote -- that the assumptions should be tweaked as the reader sees fit. --Mike Buckley