Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: fut_trade who wrote (3298)	11/29/1997 8:09:00 PM
From: ItsAllCyclical	Read Replies (1) \| Respond to of 27307

Peter, Based on past earnings I think the following represents a near "best" case scenario of sales over the next 5 quarters: Prior 3.3 5.5 8.6 9.5 13.5 17.3 Assuming prior growth 21 24 29 34 39 Counting the last 4 quarters you get 126 mil in sales for fiscal 98. I'm assuming there will be 60 mil shares outstanding at the end of 98. That still gives yahoo a price-to-sales of roughly 25. Still pretty high in my book. I think the biggest question mark is not how fast sales will grow, but how much expenses will grow with sales. From the last earnings report expenses totaled roughly 90% of sales for the past 9 months and about 80% of sales for the comparable period during 96. So expenses have gone up as a % of sales. It looks like their general expenses did not go up too much but their sales and marketing expenses skyrocketed along with product development. Sales and marketing expenses were roughly 80% of sales in 96 and 66% in 97. So I'm assuming the following for 98: Sales and marketing expenses 60% of 126 = 75.5 mil Product development for 98 = 17 mil General Expenses = 8 mil About 100 mil total for 126 mil in sales equals about 20% profit margin. 26/60 = .43 cents a share for 98. For 97 lets assume they are going to do a total of 60 mil based on doing 21 mil in this next quarter for sales. 126/60 is roughly 2 or 200%. Now let's assume that they make estimates of .33 x 200 = 66 dollars a share given an optimistic portrayal. Most stocks historically trade below their growth rates. If I were an analyst this is the best 12 month target I would give yhoo would be 66 even based on it's "hypergrowth". More reasonable would be 35 based on a PE of 100. My prediction... I completely agree the internet is big and everyone knows this. Yahoo will not crash in the near term because of this. Yahoo will stay in a 30-60 dollar trading range over the next 12 months. Given this bias, the overall market, new competitors and the potential of not meeting the optimistic scenario I think holding a short position anywhere above 50 will be profitable. On the low side if yahoo started trading purely off of fundamentals again (bear market) it easily could go below 20. I think the high side in a great market would be 75. I'm trying to sketch out a worst case scenario for myself. I would be curious to see your estimates of earnings/sales/expenses. While yahoo's earnings may be "hypergrowth" I do not see the same from the stock price during the next 12 months. Respectfully, Jim