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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: RFF who wrote (4590)	3/13/1998 11:19:00 PM
From: 5,17,37,5,101,...	Read Replies (1) \| Respond to of 6980

RF, you're right about the DCF model. I calculated $43 using 25% growth for the next several years then declining growth rate till year 14 out in which I assumed no growth. I even assumed 10% increase in shares outstanding each year for several years then a decline in the number of shares. BAY will need more capital to compete with CSCO and launch new products. I also assumed a 15% disc rate which then declines in years out as business matures and is viewed as less risky. PS: I didn't rejigger the numbers along the way to get the answer I wanted. $43.00 popped up the on the first try. This doesn't mean assumptions are correct though. Jackson

To: RFF who wrote (4590)	3/16/1998 5:38:00 PM
From: Wizard Wannabe	Read Replies (1) \| Respond to of 6980

I performed a fundamental analysis over at eduvest.com using the following input assumptions: Shares outstanding 220 mil (10Q) Long Term Debt 99 mil (10Q) Book value $6.66 per share (Edgar Snapshot) Projected EPS (yearly) $1.58 (Zacks) Projected avg. growth in earnings 45% (Proj./current) Projected avg. growth in Sales 25% (Chat room talk) AAA Bond yield 6.81% Current Earnings $1.09 per shr (Zacks) Years earnings growth to be sustained 1 yr (conservative) Results: $72.12 per share, p/e 45.65 (a little high), Relative Risk: 1.86 (Fairly risky. With the model, you really want to be around the "1" mark) I posted the above results in the model's forum, so you can access, examine the input assumptions, and even make changes. I then decided to play a different scenario by changing the following: I changed Projected eps from 1.58 to 1.38 thus changing percentage of earnings growth from 45% to 30%. This should give me a more conservative result. Results: $45.17 as a value point, p/e 32.73, Relative Risk 1.34. Bottom line: Barring any negative surprises, bay appears considerably undervalued fundamentally speaking. wizzy