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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (2900)	4/25/2002 11:37:05 AM
From: The Ox	Respond to of 95463

Thanks for the feedback, Cary and BWAC. Like any single ratio or valuation metric, it should not be used as the end-all or be-all. I find it an easy way to look at companies that are not generating significant earnings to see if there may be more value than the stock price is 'suggesting'. I like to use this formula for past and potential future data - by modifying any of the variables it's possible to see how things might be different. 1st, I like to reduce(or increase) the FV based on the most current quarterly losses or by using the company's future guidance for profits/losses and revenue. I haven't listened to any of the conference calls from AMCC, VTSS or PMCS but for the sake of discussion let's assume that all 3 companies guided to flat revenues and a similar performance as the current quarter. Then we can reduce AMCC's FV by at least 40 million, which would raise their 'current' MCFVS number. If a company's market cap is lower than their FV, then this equation doesn't work. If a company is generating terrific earnings because of very high margins, then this equation isn't as critical for analysis and the standards like P/E and P/S are more valuable. One of the best applications of the MCFVS formula is when you are looking at a company that has cash per share greater than the stock price. Obviously, cash alone doesn't tell us much since we are only looking at one side of the balance sheet and it doens't reflect debt or other liabilities.