Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: hueyone who wrote (43668)	6/19/2001 11:12:59 PM
From: Mike Buckley	Respond to of 54805

Huey, Based on your analysis of Siebel's adjusted free cash flow, what do you think a range of fair value for the stock is, and how do you determine that? --Mike Buckley

To: hueyone who wrote (43668)	6/20/2001 2:45:40 AM
From: EnricoPalazzo	Respond to of 54805

Yes, I'm getting numbers that are pretty close to yours. The following numbers are from the most recent 10K. I don't know if they include the companies acquired in 2000 (Janna, OpenSite, OpenLink) 1999 2000 Q101 Operating Cash Flow 89,746 438,568 226,012 minus tax benefit of options -91,679 -185,613 -31,000 minus Capital Expenditure* -22714 -197,775 -91,944 FCF, ignoring option effect -24,647 55,180 103,068 *I think we calculated CapEx differently. Since there's a row in the cash flow statement about proceeds from sale of capital equipment, I removed that from Capex. So in 99, they spent 33.5 on PPE (plants, property and equipment --mainly computers, in Siebel's case), but they got 13.3 from selling PPE, so I gave them a net capital expenditure of about 22 million. Those numbers aren't as bad as I had feared. Siebel has about 500 million shares outstanding, so they earned, correcting for stock options: 1999 2000 Q101 -.05 .11 .21 And the following Cash Flow / Revenue margins: 1999 2000 Q101 -3.0% 3.1% 17.5% If we assume that the Cash Flow / Revenue margins stay roughly at 17.5% (the latest quarterly seemed to imply that management has wrung out most of the inefficiencies they can think of), and that revenues for the year hit analysts' expectations of $2.4 billion (meaning no QOQ growth, since Q1 was about $600 million), that gets us $.84 per share of FCF this year. That's a P/FCF ratio of about 50, for a company whose revenues are growing fairly rapidly (33% this year, if they hit analysts' estimates; in the last few years, they were at a 100% run rate). Mike, I don't yet feel comfortable commenting on whether or not that's a "good" value. I'm still in the midst of studying the company's prospects, so I'm not yet ready to purchase (plus I still have the mental illness known as "Rambus", so I'm happy with my money in that stock for now). As of yet, I like what I see. I am not clear what you mean about counting "it" all in one quarter. Can you please elaborate? Actually, two quarters, my bad. For some reason, Siebel only counted stock option benefits for Q1 and Q4 of last year (about $90 million in tax savings each). I'm not sure if they've changed that this year or not, but this year they only counted $30 million in Q1. Maybe that's because no insiders are crazy enough to exercise at the latest prices...