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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Reginald Middleton who wrote (28761)	2/24/1998 1:58:00 PM
From: Kevin K. Spurway	Respond to of 1572777

If you monetize the assets, they become cash flows. Therefore, the PV of future cash flows goes up, in contradiction to your original assumption of a constant $100 of discounted future cash flows. The way you originally phrased the question, you implied that the assets would be held by Company A, unutilized, in perpetuity. That's what a constant $100 in discounted future cash flows MEANS. Obviously this is not a realistic assumption, as I'm sure you'd agree, although it is useful for the academic purposes of your question. I'm not questioning your models or methods. I think we're probably pretty much in agreement on the mechanics of it all. I'm just very skeptical that there's any utility in attempting to determine AMD's market value by using DCF. ADM would be a more suitable candidate for this type of analysis because earnings are much more stable and assets are much easier to value. Kevin