To: Mad2 who wrote (4089 ) 3/10/2002 11:49:04 PM From: DanZ Read Replies (2) | Respond to Your method of valuing firms is bogus. Funny, I've never seen your calculation in any book, and I have an MBA and took more than one graduate level class specifically dedicated to valuing firms. Let's assume for a moment that your bogus calculation has merit. The net tangible value today is $28.5 million. Using your bogus formula, the value today would be .2 x 16 x 28.5 = 91.2 million = about $9 per share. The net tangible value won't likely drop to 8.8 million at the end of this year because revenues will offset the payment to Zensano. You also seem to have forgotten that before Gum Tech bought the other 40% of Gel Tech, they gave 40% of the net to Zensano anyway. It appeared on the minority interest line on the income statement. Gum Tech would have paid Zensano $11.5 million anyway when sales reach about $28 million. You also don't appear to have given any allowance for an increase in sales due to international distribution or new products. Carl Johnson is quoted as saying "We are well-positioned to pursue expansion of complementary product lines and distribution channels, both domestically and abroad, and we are in the process of further strengthening the base of the company through strategic alliances and new product development." What do you suppose the strategic alliance is? My bet is that he's referring to the long awaited big partner, and that it is wrapped around a deal to distribute Zicam Cold and Allergy, and new products outside the US. The short interest is down from a high of about 1.5 million shares to only about 650,000 last month. That alone should give you a clue that even the shorts see value in the stock between 6 and 9 because that's where most of the shares traded when they covered.
