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To: Mark McLeod who wrote (2651)	10/22/1997 7:03:00 PM
From: Bubba	Respond to of 10227

$200-$250 is totally possible. What will determine it is really finance 101. Subs x ARPU x 12 mos x operating margin x terminal multiple = TEV (Total Enterprise Value). With 360mm fully dilluted shares, $200 is a TEV of $72 billion. Multiply it out & with 9mm subs (incl Int'l), $70 ARPU & 45% margin you get $3.4 bil EBITDA. $72 bil TEV is roughly 21x. The ratio of TEV to EBITDA has same measure conceptually as P/E or, reversed, E/P. Essentially, what is the "cash flow yield" on your "asset". A TEV/EBITDA of 21x is cash flow yield of 1/21 or 4.75%. Easily acceptable if your EBITDA is growing rapidly, e.g., 20%. In that case your yield is 4.75% this year and 4.75% x 1.20 or 5.67% next year and so on. IOW, guess what, pay a premium multiple for growth. Just like Coke or Gillette. Here endeth the lesson PS - I don't think these numbers are a stretch. Long and hopeful, Bubba B. Buuba, BhB.