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

To: hueyone who wrote (43648)	6/19/2001 12:51:33 PM
From: Seeker of Truth	Respond to of 54805

I always think life is too short to hold a stock that's worrying you at nights. I don't own SEBL anymore. BUT, it's the nature of the software business that almost all of the expense is up front. If you sell a program or system 10,000 times, it doesn't cost you that much more than selling 1000 copies. But the cash flow and profit improve enormously, in this hypothetical case, much more than 10 times. So I don't think the slim cash flow of the past is very indicative of the future for SEBL. But I've retreated to an attitude where I'd rather miss 2/3 of the great gorilla chances and keep my tranquillity, because I have to work hard at my day job. If I wanted to risk my serenity I would be more positive about SEBL.

To: hueyone who wrote (43648)	6/19/2001 2:50:49 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 54805

Hi Huey - Yes, quite a lightbulb flashing eye-opening experience to actually complete the spade work, isn't it? Maybe someone should do compute something like this for the whole gorilla portfolio and post the results? John.

To: hueyone who wrote (43648)	6/19/2001 3:07:41 PM
From: EnricoPalazzo	Read Replies (2) \| Respond to of 54805

In the most recent quarter, 91% of SEBL's free cash flow was options exercise related, in year 2000, 71% of SEBL's free cash flow was option exercise related, and in year 1999, 211% of SEBL's free cash flow was options exercise related. In year 1999, SEBL's adjusted free cash flow per share is a negative 10 cents per share. In year 2000, SEBL made 15 cents per share of adjusted free cash flow, up less than 100% from two years earlier in 1998. Yes, I know, tornadoes are revenue based, but still…. In the most recent quarter, SEBL made 1.8 cents per share of adjusted free cash flow. Run this out four quarters and you get 7 cents per share adjusted free cash flow run rate for the year. Purchase this 7 cents adjusted FCF run rate at $40 per share and you get a whopping 571 price to adjusted free cash flow ratio. Hi Huey, I too have begun looking at FCF corrected for stock options, but I'm getting different results. Can you explain what I'm missing? I have $126 million in FCF for the quarter, and $31 million for the tax benefit of stock options, i.e. 25% of the FCF, not 91%. Is there another aspect of stock options that I should be correcting for? Thanks Ethan