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

To: Bruce Brown who wrote (43522)	6/15/2001 11:51:52 AM
From: Pirah Naman	Read Replies (1) \| Respond to of 54805

Now here's a surprising statistic: "U.S. Internet traffic slowed by 10 percent in the latest quarter." biz.yahoo.com - Pirah

To: Bruce Brown who wrote (43522)	6/15/2001 11:59:22 AM
From: Mike Buckley	Respond to of 54805

Bruce, To expand on your point, let's take a look at long-term projections for CRM growth. Using the details I'm supplying at the end of this post, we've got so-called "actual" CRM revenue for 1999 pegged at anywhere from $2-$4 billion. One consultancy says that 1999 actuals were higher than another consultancy's actuals in 2000. And to add to the problem, it's rare that any of us sees actual reports by consultancies, as opposed to pieces describing the reports. Note that Epoch says in their report written last month that IDC's actuals for 1999 were $4.2 billion. Yet Individual Investor magazine wrote in March, 2000, that IDC said CRM revenue was $1.7 billion. The article wasn't clear if that was still a projection at that time or an "actual" number. It really is difficult getting a handle on the CRM industry stuff and always has been. Using the numbers we've been given in the past year, consultancies have predicted anywhere from 25% to 100% annual CRM growth over the next few years. It will definitely be interesting to see the extent to which projections eventually change after taking into account the current economic slowdown. You're right that there is nothing definitive to hang our hat on when making valuations these days. But as you know, I'll always make the point that we still gotta try when we're making buy and sell decisions. In May, IDC Actual 1999: $4.2 billion Actual 2000: $6.6 billion Projects 35% growth through 2004 (Don't know if that's using 1999 or 2000 as the base) Using 1999 as the base, implied estimate for 2004: $19 billion Using 1999 as the base, implied estimate for 2004: $30 billion In March, Datamonitor PLC Actual 2000: $3.9 billion Estimate for 2005: $11.9 billion Implied annual growth: 25% In October, Aberdeen Group Estimate for 2001: $14 billion (not sure when that estimate was made) Estimate for 2003: $24 billion Implied annual growth: 31% In September, AMR Actual 1999: $4.4 billion Estimate for 2004: $20.8 billion Implied annual growth: 36% In March last year, IDC Actual or estimate (?) 1999: $1.7 billion Estimate for 2003: $13 billion Implied annual growth: 97% --Mike Buckley

To: Bruce Brown who wrote (43522)	6/15/2001 2:04:43 PM
From: Seeker of Truth	Read Replies (2) \| Respond to of 54805

Bruce, your point is of course good. On what should we base our EPS? I think we can't use prior estimates. Take SEBL, for example. The earnings for this quarter according to Yahoo's reporting of FIRST CALL, a broker average, will be 13 cents a share. Multiplying by 4 we get 52 cents a share as the hypothetical EPS for the next 12 months. As for the long term growth rate, let's assume 25% because that number was bandied about in an earnings discussion between SEBL management and analysts. On one hand there will be recovery, on the other hand the closer the market gets to saturation the slower the growth rate for most companies in most industries. Software might be different but software was not spared in this mini-depression so the "build once sell a million times" advantage may be cancelled out by other factors, e.g. low priced poor substitutes touted to the unwary etc. etc. At the current price we get a P/E of about 78. We take into consideration that the P/E of money is now about 25. I assume that eventually the stock will sell for about the then prevailing P/E of money. You can see that about five years of 25% growth are already in the stock price. So it looks overpriced to me. Of course I'm no savant; there may never again be a chance to buy it this low. But I'm staying out. I can imagine Mike Buckley wincing at my stupidity but Mike, we only have the brains we were born with.:-) Mike holds on until a PEG of five is reached. Maybe I'm misquoting.