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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: P. Ramamoorthy who wrote (7583)	11/5/1997 6:54:00 PM
From: CalculatedRisk	Read Replies (2) \| Respond to of 13949

Ramamoorthy, discounted FCF is the typical way to value a stock. A short-cut for Y2K companies is as follows: 1) Cash 2) Earnings for 1998 - discounted 1 year. 3) Earnings for 1999 - discounted 2 years. 4) Value of Company Jan 2000 - discounted 2 years. Let us use IMRS as an example (I have no position). Cash = $30M 1998 projected earnings $0.69 * 23.5M shares = $16.2M (see note 1) 1999 projected earnings $0.69 * 23.5M shares = $16.2M Jan 2000 value $50M (note 2) Discounted values: (note 3) Cash = $30M 1998 = $15M 1999 = $14M 2000 = $42M Value of IMRS today = $4.35 per share. Note 1: from Zacks. Plug in better estimates if you have them. Note 2: Consulting companies usually trade with a PSR of 1 or 2, I estimated that revenues in 2000 will return to the $25M level - plug in whatever revenue you believe, since I don't follow this Company. Note 3: Used 8% discount rate. Hope this helps with your investing, Regards, Bill