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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (5918)	6/7/2002 1:11:29 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 6974

Huey, the limitation of free cash flow as a useful proxy for "owner earnings" I don't try to use free cash flow as a proxy for anything. I take it for my understanding of what it is and for the relative importance I place on it. Being open minded, that's always subject to change. I also try not to look at anything in a vacuum, including free cash flow. In the last two years both free cash flow and the free cash flow margin have dramatically increased to unprecedented levels in the history of the company. That's largely because of two factors. The first is that because of the low stock price, employee stock options have not been exercised to any great degree and, thus, adjustments for related tax benefits have been minimal. The second reason is that during the period of declining revenue, the receivables are a net contributor to cash flow rather than a net user of cash flow as usually happens during periods of growth. Once we see the revenue increase over a reasonable period of time, I don't believe the current free cash flow margin is sustainable and it's even possible that free cash flow dollars will decrease. --Mike Buckley