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Gold/Mining/Energy : CPN: Calpine Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (240)	1/6/2002 2:24:40 PM
From: Clement	Read Replies (2) \| Respond to of 555

Very strange to see the market reacting positively to a company that is hinting it will slow down it's developement plans. But maybe they see that with slower development, there will be higher price support in the power generation markets and better opportunity to maintain profit margins. I really wouldn't be surprised that market reacts positively to this news. Valuation in the long run is a function of future cash flows and the risk to those cash flows. Analysts want Calpine to slow down a little so that the risk to the cash flows is less. The faster a company grows, historically according to the models of the ratings agencies, the greater potential for a trip -- and with a relatively high debt level - bankruptcy. Let's face it, doubling capacity each year is pretty high -- but at the same time, the valuation of Calpine suggests that there is a lot of risk being factored in. Calpine is worth something in the range of $30 in breakup value alone (forget about future growth). So the only reason why it can be trading this low is if people don't think they can capitalize on the opportunities they have right now.