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

To: chaz who wrote (51241)	5/6/2002 2:57:25 AM
From: EnricoPalazzo	Read Replies (1) \| Respond to of 54805

("loading up [on ELON] while it's cheap" may take on new meaning within the next year or two.) ...prompts me to ask if you see anything tech that's cheap today? I haven't looked at anything that closely lately, but I think that Microsoft is getting pretty cheap (several months ago I posted that I'd consider buying MSFT at around 50--it's 49 now; was about 70 then... sadly I bought too early, at 56). Microsoft's cash flow from operations (excluding the stock option stuff, which i think is important, but which i don't have time to calculate right now) is at around $4 bil per quarter, or about $16 bil a year. At a market cap of $270 bil, that's a ratio of 17, which in my opinion is pretty cheap for a company in Microsoft's position. As I said, that excludes lots of relevant info, but it gives you a rough idea. I also think that Siebel looks interesting right now, but I'm not investigating it for purchase at the moment. Contrariwise, Echelon has cash flow from operations at about -$18 million in the past year (-5 in the most recent quarter, -9 the quarter before that). Negative cash flow from operations is never a good sign. Great companies are usually cash-positive from an early age (for instance Microsoft, and I imagine Siebel, Intel & Cisco, but I could be wrong about those last three). I'm not sure if Echelon has ever had a positive cash flow from operations quarter. I did notice that their change in accounts receivable has been highly negative over the last few quarers (-11 million in last quarter alone). I don't know exactly what's going on, but that's usually a very bad sign. Now as I said, I don't know very much about Echelon's core business, but I know enough about it and it's financial position to know that I'm not interested--it may go much lower, permanently. It may also go up, I don't know, but from what I see, I'm letting this one go. Ethan