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To: Seeker of Truth who wrote (43534)	6/15/2001 3:48:26 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Malcolm, You can see that about five years of 25% growth are already in [Siebel's] stock price. Let's assume Siebel grows its revenue 25% year for five years. If that happens, they'll have $5.5 billion in revenue in 2005. Apply a PSR multiple of 15 and the stock price will be about $180 assuming no stock dilution (which is highly unlikely). That's 35% annual growth in the stock price. To get down to 25% annual growth in the stock price, the stock would be at about $120. Using the $5.5 billion revenue, that would be a PSR of about 3.3. Those are awfully rough numbers at best, but I'm not sure we can say the market is pricing 25% growth into the price of the stock. Mike holds on until a PEG of five is reached. Maybe I'm misquoting. Yep, but that's okay. :) I said I would certainly sell at 5.0. But I didn't rule out selling at a lower PEG, especially if I need the funds to live on. --Mike Buckley

To: Seeker of Truth who wrote (43534)	6/17/2001 1:56:41 PM
From: Bruce Brown	Respond to of 54805

On what should we base our EPS? Good question, Malcolm. I don't know. Managements and analysts are looking for that answer as well. It's a "wipe the slate clean and figure out what the new outlook is as opposed to the old outlook" type of environment. Problem is, nobody really knows exactly what the new outlook is at the moment. Time will work all of that out. 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. EPS growth for a growth company is rarely quite so linear as your example above of taking one quarter's EPS estimates and multiplying by 4 to get the forward 12 months EPS estimates. In a few rare growth companies that have some sort of controlled growth in their industry with a track record of being able to execute through a variety of economic climates to meet those controlled growth levels, we can calculate EPS growth. Siebel's growth rate has a wider range of scenarios attached to it and it's difficult to go out on a limb at the moment and nail down anything exact at the moment. We'll know a little more as time rolls forward in the next few weeks to months. Whether we are talking about Siebel, Cisco, Brocade, EMC, Ciena, i2, Checkpoint, Microsoft, Intel or whatever - we've seen management in some of the companies guide analysts and investors in mid April to early May for the current quarter. However, things have changed so rapidly that much of that guidance was not even accurate even though only just a few weeks have passed since it was given. So, as I mentioned in my previous post, we're all shooting at some moving targets. Not based on quarters, but weeks and even days in some cases. On the reverse side of the coin, as the growth was exploding to the upside we saw some of the similar things in the other direction where managements would guide for the next quarter and sales were so strong that guidance was easily surpassed and even updated in the middle of a quarter to reflect higher revenues and or earnings. So it works in both directions and our only formula is to use a wide variety of scenarios. Moving targets that are all difficult to justify in the current environment until a trough is hit, things stabilize and the base is built for an extended period. Perhaps we are in such a period that includes a trading range where everything trades and bases around until the discounting of some sort of improving EPS begins. Maybe at the end of Q2, the EPS bar going forward will be set so low - as everyone visits the confessional to share all sins - that forward guidance will be tempered enough so that expectations match the EPS bar. Who knows? I guess the point is it becomes difficult to assign an exact valuation at the moment since there are so many 'moving parts' to the equation/target. If the analysts are having difficulty assigning somewhat accurate revised EPS estimates and managements are altering their own guidance quarter to quarter, month to month or week to week - your question of "on what should we base our EPS?" remains valid. Revise your estimates as the information comes in - both in the decreasing as well as increasing environments scenarios. BB